FCA warns social media firms over crypto financial promotions

21 September 2023

FCA warns social media firms over crypto financial promotions

• FCA expects app stores and social media to “cease supporting and facilitating illegal crypto asset firms marketing in the UK”.
• Financial promotions regulations for crypto-assets will apply to firms globally.
• Regulator increasingly concerned about the spread of unregulated advice on social media.

The Financial Conduct Authority (FCA) warned social media firms that it would hold them responsible for the publication of illegal financial promotions of crypto-assets at PIMFA’s Compliance Conference today (21 September 2023) two days after the Online Safey Bill passed its final reading in the House of Lords.

Addressing delegates Lucy Castledine, director of consumer investments at the FCA, said the Regulator had become increasingly concerned by the spread of unregulated advice on social media and other digital channels.

And she warned crypto-assets were a risk in the consumer investment space, with consumers being “scammed into investing into crypto-assets that were not genuine” or receiving “promotions that do not properly set out the high risks involved” in investing in crypto-assets “even when they are genuine”.

She warned more consumers than ever were at risk of “taking advice from unregulated sources, such as social media, investing in assets with a higher risk than their tolerance and making them more vulnerable to scams”.

“We want to see a market where consumers can only access products and services that meet their needs and that means making sure there is a wide variety of support available,” she said.

Ms Castledine said the promotion of crypto-assets were of paramount concern to the Regulator and presented a significant risk to consumers. “Given the decentralised nature of the technology,” she said, crypto-assets were particularly attractive “to bad actors seeking to launder their funds”.

From 8 October 2023 financial promotions of crypto-assets will be regulated by the FCA, the first financial regulator in the world to regulate the promotion of crypto-assets. Ms Castledine said this represented a fundamental change to the way crypto-asset activities were dealt with in the UK. 

Ms Castledine added the definition of financial promotions for crypto assets had been kept deliberately broad to capture as many different types of financial promotion as possible adding the FCA expected the majority, if not all, crypto-asset firms to fall within scope of the regulations. Moreover, the FCA considered any firm promoting crypto-assets “wherever they are globally” to be within scope of its regulations. Any firm that did not comply with the new financial promotions regulations could face unlimited fines and the directors up to three years in prison.

Social media firms, other intermediary firms and app stores played a significant role in the promotion of crypto-assets in the UK, Ms Castledine said, and the Regulator expected them to take action to prevent the illegal promotion of crypto-assets, making it clear the FCA expected them to “cease supporting and facilitating unregistered crypto firms illegally marketing into the UK”.

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Notes for Editors

About PIMFA – the Personal Investment Management & Financial Advice Association

• PIMFA has been named one of the best places to work in the UK. Find our more here.
• PIMFA is the trade association for firms that provide wealth management, investment services and the investment and financial advice to everyone from individuals and families to charities, pension funds, trusts and companies.
• The sector currently looks after £1.65 trillion in private savings and investments and employs over 63,000 people.
• PIMFA represents both full and associate member firms. Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families to charities and pension funds, all the way to trusts and companies.  Associate members provide professional services to the PIMFA community.
• PIMFA leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena. Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients, poviding responsible stewardship for their long-term savings and investments.
• PIMFA has made numerous recommendations to the FCA regarding the Future of Advice, Future of Supervision and the FSCS levy – read more.
• PIMFA was created in 2017 as the outcome of a merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA) with a history as a trade association since 1991 – read more.
• Further information can be found at pimfa.co.uk

Contact

For further information on this release or other press matters please contact:

Matthew West, PIMFA PR Manager – MatthewW@pimfa.co.uk, +44 (0)20 7382 0376 / +44 (0) 7843 903258

Sheena Gillett, PIMFA Communications & PR Director – sheenag@pimfa.co.uk, +44 (0)20 7011 9869 / +44 (0)7979 493225