Social media platform TikTok has banned all paid promotions of financial products.

This means TikTok users can no longer partner with any financial services brand – regulated or not – to promote their products and services in their videos.

This includes, but is not limited to, promotions relating to cryptocurrency, foreign exchange, trading platforms and investment products and services.

TikTok has come under fire for its inaction regarding viral videos containing potentially harmful financial advice or information.

The platform hosts countless videos of teens and young adults discussing stocks that are “guaranteed to go up” and how to turn their ‘Stimmy’ (the US’s $600 stimulus cheques) into thousands more.

While online cowboys promising schemes to get rich quick are nothing new, the age and impressionability of their audience arguably is, with TikTok’s core demographic aged in their teens and early twenties.

Research from Allianz Trust shows huge numbers of young people began investing during 2020, as they had more time on their hands and thought more about the future. More than a quarter (27 percent) of the Millennial and Generation Z cohort in the survey spurred on to begin investing after seeing others doing it online.

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This week's financial promotions ban has been welcomed by many. One Twitter user wrote: “Actually great news. It’s quite scary how much unregulated financial advice is currently given out on TikTok.”

However, the ban does not stop all the financial “advice” on the platform. It only applies to sponsored or paid content.

Theoretically, videos like this will still be allowed.

There are concerns that the ban could exacerbate these videos. If TikTok removes content regulated firms have approved, it could simply leave room for more dodgy “advice” videos.

Some accounts include disclaimers to say they are not offering investment or tax advice, which may help them continue to operate under the ban.

But, when they say which stocks you ‘must’ buy or similar, it is easy for this message to get lost. Many followers will take the videos as advice and act accordingly.

There has been some speculation on social media that TikTok took this decision because it is currently unable to prevent under 18s from viewing the content. If this is the case, financial promotions could return once a solution is found.