UK FCA acts against social media ‘finfluencers’

Thursday, 24 October 2024
The Financial Conduct Authority (FCA) has launched targeted action against so-called ‘financial influencers’ (‘finfluencers’), unregulated social media personalities or accounts that promote financial products and share advice with followers.
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The FCA notes that increasing numbers of young people are falling victim to scams and that they can often by influenced by social media in this respect. It cites figures saying that 74 per cent of the 18- to 29-year-olds that follow social media influencers trust their advice. Further, 90 per cent of them can be encouraged to change their financial behaviour by ‘finfluencers’.

It has now announced that 20 such people are currently being interviewed under caution by the authority. Further, it has issued 38 alerts against social media accounts that it considers to contain unlawful promotions.

‘These people are not FCA authorised and are unqualified to be giving financial advice to the younger and often very impressionable age groups who follow them’, the FCA says.Finfluencers need to check the products they promote to ensure they are not breaking the law and putting their followers' livelihoods and life savings at risk.’

The crackdown comes after FCA charges were brought earlier in 2024 against nine individuals in relation to an unauthorised foreign exchange trading scheme promoted on social media.

Emmanuel Nwanze was charged with running the scheme and unauthorised promotions. Nwanze, along with Holly Thompson, also used Instagram to provide unauthorised advice on buying and selling contracts for difference (high-risk derivatives). A further seven defendants were charged with issuing unauthorised communications of financial promotions, having been paid by Nwanze to share the content on Instagram. The nine individuals had a combined Instagram following of 4.5 million people.

The FCA has published guidance on social media financial promotions. The guidance aims to ‘clarify [the FCA’s] expectations for when firms and influencers use social media to communicate financial promotions, and to address emerging consumer harm that [the FCA has] seen arising from use of social media.’

Sources

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