The UK’s financial regulator is interviewing 20 ‘finfluencers’ under caution in a crackdown on fraud.
The Financial Conduct Authority (FCA) said it had launched a targeted action against people who may be illegally touting financial products on social media.
The regulator warned there has been a significant increase in this practice, adding that these influencers are not authorised and are unqualified to give financial advice.
The FCA expressed some concern that a significant portion of these personalities’ audiences are from younger, impressionable age groups. The watchdog said 62% of 18 to 29-year-olds follow social media influencers, with 74% of those saying they trust their advice. Among those, nine in 10 followers have been encouraged to change their financial behaviour.
The individuals were interviewed voluntarily under caution. The FCA has taken action against nine people so far for promoting unauthorised trading schemes.
“Finfluencers are trusted by the people who follow them, often young and potentially vulnerable people attracted to the lifestyle they flaunt,” said Steve Smart, joint executive director of enforcement and market oversight at the FCA.
“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 FCA defines ‘finfluencers’ as “social media personalities who use their platform to promote financial products and share insights and advice with their followers”.
The watchdog started warning consumers against following the financial advice of individuals on social media advocating for crypto and forex investment opportunities in 2022.
In particular, the FCA warned financial influencers on YouTube and TikTok have been taking advantage of the ‘cost-of-living-crisis’ to promote dangerous investments to vulnerable people.
As part of its action against these ‘finfluencers’, the watchdog has also issued 38 alerts against social media accounts operated by individuals that may contain unlawful promotions.
Social media has come under significant scrutiny for its role in the rise of financial fraud cases.
Revolut – Europe’s most valuable private fintech group – this month called on Meta and other social media firms to share the liability for fraud victim reimbursements.
“Social media platforms not only continue to enable fraud, but…the issue is just as bad today as it was last year,” said Revolut’s head of financial crime Woody Malouf.
It was recently revealed that Revolut was “named in more fraud complaints than any major UK bank”.
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