Brussels is targeting financial ‘influencers’ who disseminate misleading or risky content that affects consumers without extensive knowledge of economics. The European Commission has proposed a regulation on the advertising of financial services that has a specific section for those people that many companies hire to advertise their products because they have thousands and even millions of followers on social networks such as TikTok, Instagram or Twitter. What the community government wants is that these companies are responsible for the dissemination of content that does not conform to the rules because it contains misleading information or is not clear enough regarding the risks.
The trend for those individuals with significant followings to recommend products like cryptocurrencies without having the proper knowledge has set off alarm bells in the community capital. But countries like France have even gone a step further by directly putting a stop to all the ‘influencers’ to whom it has imposed by law a series of rules that they have to in the field of advertising and that even obliges them to communicate if they have retouched the images. The rule proposed by the European Commission is limited to financial ‘influencers’ (baptized as finfluencers) and is part of a package that aims to increase the protection of small investors.
“The package introduces additional requirements regarding the marketing content of financial services. Advertisements have to be fair, clear and not misleading. They will have to present the risks and benefits in a balanced way and include the key characteristics of the products, ”says the Commission, which ensures that supervisors will see their surveillance capacity strengthened.
Regarding the ‘influencers’, the community government points directly to the companies as those responsible for the content that they disseminate and that is dangerous, regardless of whether they have been directly hired or encouraged to create promotional content. In other words, they will have the responsibility whether they attend a company event, for example, or if they broadcast a video through their social networks. If you do not comply with the established rules, the company will be responsible and you will face a fine or even the withdrawal of the license in the most dangerous cases.
The package also aims to limit the interests that commercials may have when selling some financial products over others by having certain incentives. The Commission’s proposal is to prohibit those of “direct execution”, that is, those in which there is no prior advice to the client. For the others, it establishes a series of requirements: offer a range of products that are adapted to their needs and customer demands, that are efficient with respect to cost, and that do not contain other elements that are unnecessary for the customer’s objectives and have a cost. such as unsolicited life insurance. Within three years the community government will review the operation and decide whether to move towards the prohibition of incentives, which is what consumer organizations are demanding and what investment funds and insurers oppose, reports EFE.