The Financial Conduct Authority (FCA) has initiated a crackdown on social media influencers promoting financial products illicitly.
- Twenty ‘finfluencers’ are being interviewed under caution by the FCA as part of the investigation into financial misconduct on social platforms.
- A significant rise in unauthorised financial product endorsements on social media has prompted this targeted action by the UK regulator.
- The FCA warns about the impact on young people, who are influenced by these personalities to alter their financial behaviours.
- Warnings have been issued against unlawful social media promotions, and calls for accountability extend to major tech companies.
The Financial Conduct Authority (FCA) has launched a robust action plan targeting social media ‘finfluencers’ who may be illegally promoting financial products. Interviews are being conducted with 20 individuals under caution. This operation arises from concerns about a surge in such activities, with influencers being neither authorised nor qualified to provide financial advice.
Highlighting the impact on younger demographics, the FCA pointed out that 62% of 18 to 29-year-olds follow these influencers, with a concerning 74% expressing trust in the advice given. Moreover, nine in ten followers report changes in their financial behaviour after engaging with such content.
Steve Smart, FCA’s Executive Director of Enforcement, stated, “Finfluencers are trusted by the people who follow them, often young and potentially vulnerable people attracted to the lifestyle they flaunt.” He emphasised the need for these individuals to ensure their promotions are legal and not risking the financial wellbeing of their followers.
The initiative follows the FCA’s 2022 consumer warnings against certain financial advice shared by influencers, especially regarding crypto and forex investments during the ‘cost-of-living crisis’, which disproportionately affects vulnerable populations.
To counter the increase in financial fraud facilitated through social media, the FCA has issued 38 alerts concerning accounts believed to contain illegal promotions. The scrutiny extends towards social media platforms accused of enabling such frauds, with calls for these companies to share liability in fraud reimbursements.
The FCA’s initiative underscores the need for scrutiny and accountability on social media in preventing financial fraud.
