The Financial Conduct Authority (FCA) has issued a warning to social media influencers, known as “finfluencers,” urging them to ensure they are not violating the law or jeopardising the finances of their followers. The FCA emphasised the importance of finfluencers vetting the products they endorse to safeguard their followers’ money and financial security.
In recent years, there has been a notable increase in finfluencers who use their social media platforms to promote financial products and offer advice to their audience. However, the FCA raised concerns about individuals operating without FCA authorisation and lacking the qualifications to provide financial guidance, especially to the young and impressionable demographic that comprises their followers.
The FCA disclosed that it is currently conducting voluntary interviews under caution with 20 undisclosed finfluencers. Additionally, the regulator has issued 38 alerts regarding social media accounts of finfluencers that may be engaging in unlawful promotional activities.
Research shows that a significant percentage of young adults aged 18 to 29 follow social media influencers, with a high level of trust in their recommendations. Furthermore, many of these followers have reported being influenced to alter their financial behaviours based on the advice received from these influencers.
The FCA’s investigation also extends to finfluencers endorsing foreign currency and contracts for difference (CFD) trading, which are speculative investment products. There are also concerns surrounding the promotion of credit lending and debt solutions by finfluencers. The FCA affirmed its commitment to identifying and notifying individuals promoting financial products or services without the necessary permissions.
Steve Smart, the joint executive director of enforcement and market oversight at the FCA, highlighted the responsibility finfluencers hold due to the trust placed in them by their followers. He stressed the importance of finfluencers ensuring the legality and integrity of the products they endorse to safeguard their followers’ financial well-being and savings.
Rocio Concha, the director of policy and advocacy at Which?, supported the FCA’s stance, emphasising the potential financial risks associated with followers acting on advice from social media influencers. Concha stressed the importance of holding finfluencers accountable and commended the FCA for reminding them of their legal obligations.
In conclusion, the FCA recommended individuals consult its warning list before making investment decisions and provided resources on its InvestSmart page to assist with evaluating investment choices. By promoting financial literacy and regulatory compliance, the FCA aims to protect consumers from potential financial harm arising from misleading or unlawful practices by finfluencers.