Social media platform TikTok has launched a crackdown on influencers’ promotion of financial services products, including cryptocurrency, share trading and buy now pay later.
The move is aimed at halting a growing tide of unsuitable high-risk investments and frauds being promoted on social media, but will also hit reputable financial firms.
Banks and fintechs have cottoned on to the benefits of advertising and partnering with influencers on TikTok. Monzo and Revolut post regulator content and savings app Plum has collaborated with authentic ‘fintok’ voices. But these new rules will put a stop to that.
TikTok is cracking down on financial content amid concerns younger investors are being scammed
The social media platform has updated its branded content policy to ban the promotion of all financial services and products globally.
This includes but is not limited to loans and credit cards, buy now pay later services like Klarna, trading platforms, cryptocurrencies and get rich quick schemes.
Its advertising policy, which allows financial services companies to advertise to people over the age of 18, remains unchanged. Adverts promoting virtual currencies and cryptocurrencies are already prohibited, as are pyramid schemes and get rich quick schemes.
The platform has come under scrutiny for allowing unregulated financial advice which could mislead younger investors.
Some of the advice – ‘I see a stock going up and I buy it, and I just watch it until it stops going up, and then I sell it’ – is questionable at best, or possibly tongue-in-cheek. Others on the platform are straight scammers.
The Financial Conduct Authority has already warned that financially vulnerable, young investors are engaging in ‘unsuitable’ high-risk investing.
‘We are worried that some investors are being tempted – often through online adverts or high-pressure sales tactics – into buying higher-risk products that are very unlikely to be unsuitable for them,’ the regulator said in March.
Holly Mackay, founder and chief executive of Boring Money said: ‘The sole incentive for unqualified influencers to talk about financial products has been making money. With that removed, it still leaves the road open for those who want to help and inform, but are agnostic about which products people end up choosing.’
‘In practice, most of the big brands are still struggling to get their heads around Twitter, let alone work out TikTok, so this should actually just clean up those who were spouting dangerous rubbish for commercial gain.’
Other companies are also starting to take a harder line on scam adverts on their platforms. Google announced plans to clamp down on saving and investing scam adverts in the UK.
Businesses advertising financial services or products via Google will, from 30 August, have to demonstrate that they are authorised by the FCA or qualify for one of the ‘limited exemptions’ available.
The exemptions, among others, include products in scope of its ‘Debt service policy’, financial spread betting, gambling adverts and ‘Products in scope of our Cryptocurrencies, Credit repair, and Binary options policies.’ All adverts for these products or investments will still have to comply with separate Google advert policies.
The regulator threatened to take legal action against Google and social media companies after it issued 1,200 warnings about fraudulent adverts on their platforms last year, which is double the amount from 2019.
