The City regulator has issued a warning to social media influencers, urging them to ensure they are not breaking the law in their promotional activities. The Financial Conduct Authority (FCA) highlighted concerns about finfluencers who promote financial products without the necessary authorisation or qualifications to provide financial advice, especially to younger and more impressionable audiences. The FCA revealed that it is currently interviewing 20 finfluencers under caution and has issued alerts against 38 social media accounts operated by influencers that may contain unlawful promotions.
According to the regulator, a significant increase in the number of finfluencers in recent years has led to a situation where nearly two-thirds of 18 to 29-year-olds follow social media influencers, with a high level of trust in the advice they provide. The FCA expressed concerns about the promotion of risky financial products such as foreign currency and contracts for difference (CFD) trading by these influencers, as well as credit lending and debt solutions. The regulator emphasised the need for influencers to carefully vet the products they endorse to protect their followers’ financial well-being.
Steve Smart, the joint executive director of enforcement and market oversight at the FCA, emphasised the importance of finfluencers ensuring compliance with the law to safeguard their followers’ livelihoods and savings. Rocio Concha, director of policy and advocacy at Which?, echoed these sentiments, highlighting the potential costly consequences of followers acting on influencers’ advice. Both the FCA and Which? stressed the legal responsibilities of influencers and the need for regulatory action against those found to be in breach of regulations.
In light of these warnings, the FCA advised the public to consult their warning list before making investment decisions and referred them to the InvestSmart page for additional information on sound investment practices. As the regulator continues to monitor and address issues related to financial promotions by influencers, the message to influencers is clear: compliance with the law is essential to protect both themselves and their followers from financial risks.