At the end of October, the FCA interviewed twenty finfluencers under caution.
What is a finfluencer, I hear you say? Finfluencers, or financial influencers, are individuals who offer advice and information on various financial topics, including saving, investing, cryptocurrency, and sometimes even ways to get rich quickly. They tend to be social media personalities who use their platforms to promote financial products and share insights and advice with their followers. They usually offer advice in quick, easy-to-digest videos, which can be engaging, but may not provide all the information an individual needs to make a fully informed decision.
So why is the FCA interviewing them under caution? Since the action taken in May 2024, where charges were brought against nine individuals in relation to an unauthorised foreign exchange trading scheme promoted on their social media accounts, the FCA are launching targeted action against specific finfluencers who they believe may be touting financial services products illegally on their social media accounts. As part of this action, the FCA have issued 38 alerts against social media accounts operated by finfluencers which may contain unlawful promotions.
Over the last few years, finfluencers have become more prominent on social media. It should be clearly stated that these individuals are not authorised by the FCA and are unqualified to be giving financial advice to the younger and often very impressionable age groups who follow them.
The FCA is seeing an increasing number of young people falling victim to scams, and finfluencers can often play a part. Nearly two-thirds (62%) of 18 to 29-year olds follow social media influencers, 74% of those said they trusted their advice and 9 in 10 young followers have been encouraged to change their financial behaviour.
It should be noted that this is not a new phenomenon: in the past, the FCA, and its predecessor the Financial Services Authority (FSA), have been concerned with financial journalists giving ‘advice’ to their readers and have acted to manage this activity. Social media and finfluencers are part of the ongoing mission of the FCA to ensure authorised and qualified individuals give advice to consumers. It serves as a reminder to firms to ensure that they control their financial promotions and, if considering using a ‘finfluencer’, wisely review their content before they go live so they do not do anything that could mislead or harm customers.
