The Financial Conduct Authority (FCA) has intensified its scrutiny on social media influencers promoting financial products.
- Twenty ‘finfluencers’ are being interviewed under caution as part of the FCA’s fraud crackdown.
- The FCA highlights a worrying trend of unauthorised individuals offering financial advice on social media.
- Younger audiences are particularly susceptible, with 62% of 18-29 year-olds following such influencers.
- The FCA has already initiated actions against certain individuals and issued 38 alerts on dubious promotions.
The Financial Conduct Authority (FCA) has embarked on a concerted effort to address the rising challenge posed by social media influencers promoting financial products without proper authorisation. This initiative has resulted in interviewing 20 such influencers under caution. These influencers, often referred to as ‘finfluencers’, are known for sharing financial advice and product endorsements, which the FCA finds concerning.
There has been a notable increase in social media personalities who, despite lacking the requisite qualifications, influence many young followers. The FCA’s data reveals that 62% of individuals aged between 18 and 29 follow these influencers, and 74% of them trust the advice provided. Alarmingly, nine out of ten followers have reportedly altered their financial behaviours based on such advice.
Steve Smart, the joint executive director of enforcement and market oversight at the FCA, stressed the responsibility influencers have in ensuring the legality and safety of the financial products they promote, warning that their actions could jeopardise followers’ financial well-being. The FCA’s proactive measures have already led to actions against nine individuals for promoting unauthorised trading schemes.
The FCA’s concern extends beyond individual influencers to the platforms that host them. It has issued 38 alerts related to accounts potentially promoting unlawful content. Social media’s role in financial fraud is under significant scrutiny, prompting calls for platforms like Meta to share liability in fraud cases, as highlighted by Revolut’s head of financial crime, Woody Malouf.
The regulatory body started cautioning consumers in 2022 about the dangers of taking financial advice from social media personalities, especially those promoting volatile investments like cryptocurrency and forex trading. The current cost-of-living crisis has only exacerbated the situation, making vulnerable audiences more prone to risky financial endeavours.
The FCA’s actions underscore the critical need for regulatory oversight in protecting consumers from unauthorised financial advice on social media.
