Part 2: Navigating the Nuances
Applying the "Business Test": Unpacking Influencer Roles and Responsibilities, a Delicate Balance.
You may think that an influencer needs to be directly compensated by a firm to be subject to the financial promotion rules. But the reality is more nuanced. The guidelines provide several examples where even the mere anticipation of future revenue could mean an influencer is acting "in the course of business."
For instance, let's say an influencer is not currently employed by an investment firm but is frequently promoting their services. If their goal is to catch the firm's eye and potentially generate revenue from a relationship down the line, they could be considered acting with a commercial interest.
Or what about the influencer looking to boost their follower count and online clout? If they're promoting a firm's products or services as a means to acquire more likes, shares, and engagement, which they can then leverage for higher-paying brand deals, they too may meet the "business test" criteria.
The key takeaway is that compensation isn't the only concern. Any underlying commercial motivations could potentially trigger the financial promotion rules.
Platform Perilous: Mind the Features and Compliance Pitfalls
With each social platform offering its own unique features and quirks, ensuring compliance with expectations is no simple feat. There are several platform-specific pitfalls to be aware of.
On Twitter, for example, you'll need to be extra vigilant about those pesky character limits. A risk warning being truncated or obscured on this character-limited medium would fail to meet the required prominence standards.
Video-centric platforms like TikTok and YouTube bring their own challenges. While long-form YouTube videos may allow ample time for risk warnings, they must be "clearly and prominently displayed" throughout the duration of the financial promotion. No burying them at the end!
And for those snappy TikTok clips, the position of risk info is crucial. It's frowned upon when the main video hypes all the benefits, while the risks are relegated to the caption below. Balance is key.
Unauthorised Sharing - A Risky Gamble
In the freewheeling world of social media, your carefully crafted financial promotion could easily end up in unintended inboxes through consumer sharing and forwarding.
While firms aren't directly culpable for this unauthorised redistribution, it's still a potential source of non-compliance. If your promotion intended for professional investors somehow reaches retail audiences through unchecked retweets, you could be on shaky ground.
That's why it's suggested to exercise caution when promoting products or services with highly restricted target markets on these open social platforms. The inherent virality makes controlling your audience that much tougher.
Affiliate Oversight: Don't Be A Passive Participant
In the era of influencer marketing, affiliate programs have become a go-to tactic for many firms looking to extend their reach. But this partnership approach comes with its own compliance responsibilities.
Firms must take a "proactive responsibility" for how their affiliate marketers communicate financial promotions. If your affiliates are sharing promotions without your oversight or approval, you could potentially be held liable for any non-compliance.
As such, you'll want to implement robust monitoring processes to ensure your affiliate cohort remains in line with all relevant rules. It's even suggested to cap the number of affiliate partnerships to ensure adequate oversight remains feasible.
When it comes to affiliates, taking a hands-off approach is simply not an option.
Stay tuned for the next part of this series, and keep up to date with all adclear.ai and marketing regulation news. If you are unsure if your marketing content passes the new FCA regulations – please reach out at contact@adclear.ai.
Applying the "Business Test": Unpacking Influencer Roles and Responsibilities, a Delicate Balance.
You may think that an influencer needs to be directly compensated by a firm to be subject to the financial promotion rules. But the reality is more nuanced. The guidelines provide several examples where even the mere anticipation of future revenue could mean an influencer is acting "in the course of business."
For instance, let's say an influencer is not currently employed by an investment firm but is frequently promoting their services. If their goal is to catch the firm's eye and potentially generate revenue from a relationship down the line, they could be considered acting with a commercial interest.
Or what about the influencer looking to boost their follower count and online clout? If they're promoting a firm's products or services as a means to acquire more likes, shares, and engagement, which they can then leverage for higher-paying brand deals, they too may meet the "business test" criteria.
The key takeaway is that compensation isn't the only concern. Any underlying commercial motivations could potentially trigger the financial promotion rules.
Platform Perilous: Mind the Features and Compliance Pitfalls
With each social platform offering its own unique features and quirks, ensuring compliance with expectations is no simple feat. There are several platform-specific pitfalls to be aware of.
On Twitter, for example, you'll need to be extra vigilant about those pesky character limits. A risk warning being truncated or obscured on this character-limited medium would fail to meet the required prominence standards.
Video-centric platforms like TikTok and YouTube bring their own challenges. While long-form YouTube videos may allow ample time for risk warnings, they must be "clearly and prominently displayed" throughout the duration of the financial promotion. No burying them at the end!
And for those snappy TikTok clips, the position of risk info is crucial. It's frowned upon when the main video hypes all the benefits, while the risks are relegated to the caption below. Balance is key.
Unauthorised Sharing - A Risky Gamble
In the freewheeling world of social media, your carefully crafted financial promotion could easily end up in unintended inboxes through consumer sharing and forwarding.
While firms aren't directly culpable for this unauthorised redistribution, it's still a potential source of non-compliance. If your promotion intended for professional investors somehow reaches retail audiences through unchecked retweets, you could be on shaky ground.
That's why it's suggested to exercise caution when promoting products or services with highly restricted target markets on these open social platforms. The inherent virality makes controlling your audience that much tougher.
Affiliate Oversight: Don't Be A Passive Participant
In the era of influencer marketing, affiliate programs have become a go-to tactic for many firms looking to extend their reach. But this partnership approach comes with its own compliance responsibilities.
Firms must take a "proactive responsibility" for how their affiliate marketers communicate financial promotions. If your affiliates are sharing promotions without your oversight or approval, you could potentially be held liable for any non-compliance.
As such, you'll want to implement robust monitoring processes to ensure your affiliate cohort remains in line with all relevant rules. It's even suggested to cap the number of affiliate partnerships to ensure adequate oversight remains feasible.
When it comes to affiliates, taking a hands-off approach is simply not an option.
Stay tuned for the next part of this series, and keep up to date with all adclear.ai and marketing regulation news. If you are unsure if your marketing content passes the new FCA regulations – please reach out at contact@adclear.ai.
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