EU watchdog targets misleading online financial promotions, Marketing & Advertising News, ET BrandEquity
By Huw Jones
European Union regulators need more powers to crack down on misleading online financial promotions, the bloc’s securities watchdog said on Friday.
The EU’s executive European Commission is to set out a retail investor strategy this year to catch up with rapid changes in technology that now allow people to buy stocks or bitcoin with just a few swipes on their smartphone.
The bloc wants greater participation from retail investors to help build a deeper capital market that relies less on bank loans to fund the economy.
“I think these are fundamental changes in the way the market works and who engages in it,” Verena Ross, chairwoman of the European Securities and Markets Authority (ESMA), told Reuters.
“I think the downside of part of this is that it attracts a lot of speculation and a kind of gamification of how retail investors engage in financial markets.”
The commission has sought advice from ESMA and the watchdog made several recommendations on Friday, including a review of the MiFID law on bloc securities to give national regulators the power to take “quick and effective action “against deceptive commercial practices.
EU law should also include a definition of what constitutes marketing communications to clarify that online advertising is also covered, ESMA said.
Ross said there was also a need to ensure financial promotions on social media contain “at a glance” information for investors.
“You should be able to not only see the title that you can make a lot of money here, but also have the vital information about it, that it has a cost, it has a risk,” Ross said.
ESMA will work more with national regulators to counter aggressive marketing and ensure companies are properly complying with requirements, Ross said.
ESMA has also recommended that disclosure documents issued by banks and other financial companies be machine-readable to help create public databases and aid comparison websites and “robo” advisers.
There should also be a standard format for cost and fee information for financial products, he said.