The Financial Conduct Authority (FCA) has outlined stricter rules to regulate financial promotions of products, including buy now pay later (BNPL).
Under the new rules, companies will have to regularly demonstrate to the FCA that they have the right expertise for the products being promoted. Associated risks must be properly stated.
The FCA has repeatedly warned against firms conducting financial promotions of high-risk investments and credit products without providing sufficient information about the potential dangers.
This has been a particular area of concern during the current economic downturn, which has seen many cash-strapped consumers turn to credit products and high-risk investments such as cryptoassets.
The use of BNPL has skyrocketed amid the soaring cost of living. Data has shown a significant percentage of people, particularly younger people, don’t understand the risk of debt that comes with BNPL.
The FCA is particularly concerned with companies promoting potentially dangerous financial products online through social media.
“Social media and online advertising means that consumers are taking less time between seeing a promotion and making a financial decision,” said the executive director of markets for the FCA, Sarah Pritchard.
“It is, therefore, essential that they are equipped with the right information at the right time so that they can make good financial decisions. This is especially important as we face the rising cost of living.”
Pritchard said that the new rules would “ensure those approving ads have the appropriate expertise and are held accountable for the promotions they sign off”.
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