Freetrade, one of the fast-growing commission-free stock brokers claims to change the way we trade stocks and shares has been sanctioned by the FCA and is banned from social media promotions.
Freetrade has received a supervisory notice from the UK regulator which showed that Freetrade had been contacted by the FCA in December and had been asked to remove all paid-for influencer posts from its app within 24 hours.
The notice which is 9 pages long is a public dressing down for the investment app, which complied with the FCA’s request.
The FCA felt compelled to act following the publication of a video by an unnamed personal finance influencer, on TikTok.
The influencer said she was sponsored by Freetrade and promoted the broker in her videos, some of which did not contain appropriate risk warnings and disclosure notices.
Whilst other videos were broadcast without being approved as financial promotions, by Freetrade’s compliance department.
Furthermore, the social media videos contained misleading information, as the influencer claimed that trading through Freetrade had allowed her to clear, or pay down her debts.
Something which the FCA believed represented a threat to indebted and or vulnerable consumers.
The FCA & Social Media Influencers
The regulator stated that there was a clear commercial relationship between Freetrade and the influencer which put the onus for the approval of financial promotions on the broker.
The FCA also noted that the story about her paying down her debts after trading with Freetrade generated wider media interest.
The FCA has banned Freetrade from using social media for the purpose of financial promotion, having previously warned the firm that it was breaking the rules, on two separate occasions, over the last two years.
In doing so Freetrade put itself in breach of COBS or the conduct of business rules which are at the heart of the FCA rulebook.
For its part, following the publication of the supervisory notice Freetrade said that:
“We are committed to upholding the highest standards, ensuring that we act in the best interests of our customers and treat them fairly.”
Though given the FCA’s findings it seems the firm needed to improve its internal systems to allow them to fully implement those goals.
Freetrade expanding into Sweeden
Freetrade has, however, had a more positive interaction with regulators in Sweden, who approved the firm’s products for launch in the country, which the broker hopes will act as the springboard for a wider European expansion for the firm.