The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has announced that it has written to several social media and platform companies encouraging them to take proactive steps to prevent the promotion of unauthorised financial services.

Social media providers which received ESMA’s communique on the matter include X (formerly Twitter), Meta (which operates Facebook and Instagram), TikTok, Alphabet, Telegram, Snap, Amazon, Apple, Google, and Reddit.

ESMA said that the increasing spread of online scams targeting retail investors poses a serious risk to investors themselves and to society, with fraudulent actors exploiting digital platforms to advertise unlawful financial services. These activities often mislead consumers into engaging with firms that lack proper authorisation, resulting in financial losses and in the loss of trust in the financial sector.

This approach complements last week’s initiative launched by the International Organization of Securities Commissions, highlighting the global nature of doing online harm linked to financial misconduct.

Financial regulators worldwide have been cracking down on the advertising of financial services and provision of trading and investment advice to retail traders, especially via social media. Earlier today we reported that the UAE’s SCA launched the region’s first Finfluencer license, to regulate what has been an increasing phenomenon of social media delivered advice.