(Finance) – The European Commission’s new package of rules to protect retail investors and stimulate their participation in the markets also touches on the issue of marketing and investment promotion. In particular, it introduces further requirements in relation to the content of marketing announcements of financial securities, which must be “honest, clear and not misleading“, as well as “present risks and benefits in a balanced way and include key characteristics of the product”.
Some rules concern the so-called “fin influencer“, that means influencers who deal with financial topics, advertising products, services or investment firms via social media or other digital channels. Using influencers has become an important part of investment firms’ marketing strategies.
In addition to the proposed requirements on the marketing content itself, the “makes the investment firms responsible for any marketing carried out on their behalf”, reads the text, and “investment firms will be responsible for the content and compliance of marketing communications, regardless of whether influencers or other third parties have been paid or simply incentivized to create promotional content”.
For example, the participation of an influencer and the promotion of a free event by an investment firm will be regarded as marketing communications, for which the firm will be responsible. The same provisions will apply if a video influencer talks about a company that sponsored him. In such cases, if the marketing communication is misleading, the competent authority may for example require the cessation of the communication or fine the financial intermediary who is remunerating the lender.
The package introduces new provisions to ensure effective enforcement of marketing provisions, including: businesses will have to keep track of all communications and marketing strategies, in order to ensure that sufficient information is available for the competent authorities to conduct investigations; the authorities will acquire new executive powers and may suspend or prohibit communications or marketing practices and, in the most serious cases, request the limitation of access or the removal of online content.
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