UK to Ban "Refer-a-Friend" Bonus

The UK Financial Conduct Authority (FCA) has unveiled new steps to strengthen its oversight of unlawful and non-compliant financial promotions, especially those on the internet. The FCA is worried about the rising impact of influencers and the potential risk of losses for consumers due to unauthorised promotions.

The FCA said that from October 8, 2023, it will ban incentives to invest in crypto, such as a "refer-a-friend" bonus. Additionally, the company must give a clear risk warning and enforce a 24-hour cooling-off period to give investors time to reflect on their investment decisions. These steps are in line with the protections enforced on other high-risk investments.

The FCA also said in its new guidance that crypto memes that urge investment in digital assets can also be seen as invalid promotions and can be punished.

The FCA cautioned companies that all forms of communication, including meme coins and similar content on social media, can be seen as financial promotion and must adhere to relevant regulations. The FCA has observed that users often do not realise that they comply with this rule when interacting with meme coins.

Lucy Castledine, FCA Consumer Investment Director, highlighted the importance of updating guidance to avoid consumer losses. The FCA wants to ensure that companies follow the guidance properly when marketing financial products online. For those who violate the rules and promote products unlawfully, the FCA will take decisive action against them.

The authorities hope that this move will protect consumers from potential risks and ensure that crypto markets and other investments operate with better integrity and compliance.