These days, influencers are increasingly posting recommendations for stocks, ETFs, or cryptocurrencies on social media. These influencers are referred to as “Finfluencers,” a term that combines the words “finance” and “influencer.”
For financial service providers, this opens up new opportunities to reach potential customers. One distinctive feature of social media is its strong personal connection. Regular glimpses into everyday life, direct interactions, and personal testimonials can foster a special relationship of trust. For this reason, recommendations from influencers often have a greater impact than traditional advertising.
The following article explains the regulatory requirements for advertising and investment advice and outlines the legal consequences of violations.
Depending on the subject matter, different provisions of the FIDLEG must be observed with regard to advertising. Financial service providers must identify advertising as such (Art. 8(6) FIDLEG). Advertising for financial instruments must be clearly recognizable as such in accordance with Art. 68(1) FIDLEG. If the advertising nature is not immediately apparent, the advertising should be clearly identified as such.
According to Article 95(1) of the FIDLEV, advertising is defined as any communication directed at investors that is intended to draw attention to specific financial services or financial instruments.
According to Article 95(2) of the FIDLEV, the following content is not considered advertising on its own:
the specific identification of financial instruments, with or without the publication of prices, quotes, or net asset values, price lists or price trends, or tax figures (lit. a);
Reports regarding issuers or transactions, particularly when such reports are required by law, regulatory provisions, or the rules of trading venues or DLT trading systems (lit. b);
the provision or forwarding of communications from an issuer to existing clients by financial service providers (subparagraph (c));
Reports in the trade press (lit. d).
Social media platforms now offer the option to label advertisements as such. However, simply labeling a post as an advertisement is not sufficient in every case. When advertising financial instruments, the requirements of Art. 68, paras. 2 and 3 of the FIDLEG must also be observed.
Pursuant to Art. 68(2) of the FIDLEG, advertising must refer to the prospectus and the key information document for the financial instrument in question, as well as to the place where they can be obtained, provided that such documents exist for the financial instrument. Furthermore, the advertising must not deviate from the information contained in the key information document or the prospectus (Art. 68(3) of the FIDLEG).
The FIDLEG applies to anyone who offers financial services as defined in Art. 3(c) of the FIDLEG. According to Art. 3(c)(4) of the FIDLEG, investment advice is defined as the provision of personal recommendations relating to transactions in financial instruments. Accordingly, three elements must be present for an activity to qualify as investment advice:
Finfluencers who publish general market expectations or general recommendations regarding financial instruments on their channels generally do not provide personalized investment advice. The situation may be assessed differently if users provide information on a platform about their financial situation, investment goals, or risk tolerance, and specific financial instruments or financial services are recommended to them based on that information. The more a recommendation is tailored to the individual user’s personal circumstances, the more likely it is to constitute investment advice as defined by the FIDLEG. Caution is advised in such situations, as they may result in legal consequences.
Not every personal recommendation made by a finfluencer automatically triggers the application of the FIDLEG’s code of conduct. Rather, the activity must fall within the personal and material scope of the FIDLEG. In particular, it must be determined whether the finfluencer provides financial services on a commercial basis and thus qualifies as a financial services provider within the meaning of the FIDLEG.
Under Article 89(a) of the FIDLEG, any person who intentionally provides false information or conceals material facts while fulfilling the disclosure obligations under Article 8 shall be subject to a fine of up to CHF 100,000.
Under Art. 89(b) of the FIDLEG, anyone who willfully and seriously violates the obligations regarding the appropriateness or suitability assessment under Arts. 10–14 of the FIDLEG is subject to a fine of up to CHF 100,000.
This penal provision may be relevant for finfluencers if their activities qualify as investment advice within the meaning of the FIDLEG and they intentionally and seriously violate the corresponding obligations regarding the assessment of appropriateness or suitability.
When publishing financial content, finfluencers operate in a regulatory environment that requires particular caution. Depending on the content and format of a post, the advertising regulations of the FIDLEG may apply in particular. Advertising for financial instruments must be clearly recognizable as such. If a prospectus or key information document exists for the financial instrument in question, reference must also be made to these documents and where they can be obtained.
Investment advice must be distinguished from mere advertising or general market commentary. Such advice may exist, in particular, when a recommendation regarding a financial instrument is tailored to the personal circumstances of a specific client. Whether the relevant obligations under the FIDLEG apply also depends on whether the activity falls within its scope of application and, in particular, whether it is provided on a commercial basis as a financial service.
For finfluencers and the financial service providers they work with, it is therefore advisable to carefully review the specific details of financial content, advertising partnerships, and personalized recommendations. Especially when it comes to questions of demarcation, a preliminary legal assessment can help avoid regulatory risks.
LezziLegal is happy to advise you on the following matters:
Do you have any questions about this topic, or would you like a personal consultation? Write to us—we’re happy to help.
