The Financial Conduct Authority (FCA) is persuing it’s crackdown on unregulated financial influencers, or “finfluencers”.
Twenty influencers are have been interviewed under caution by the FCA, the UK financial services regulator announced in a statement today.
The individuals were interviewed voluntarily under caution using the FCA’s criminal powers. The regulatory declined to provide their names.
The FCA said it has launched “targeted action against finfluencers who may be touting financial services products illegally”.
The FCA has also issued 38 alerts against social media accounts operated by finfluencers which may contain unlawful promotions.
Joint executive director of enforcement and market oversight at the FCA Steve Smart said: “Finfluencers are trusted by the people who follow them, often young and potentially vulnerable people attracted to the lifestyle they flaunt.
“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.
It noted that there has been a significant increase in the presence of finfluencers on social media in recent years.
“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 regulator asserted.
In the last two years the regulator has moved to shut down trading scams originating on social media sites including Instagram and TikTok. This included contacting broking platform Freetrade to request it to remove all paid-for influencer posts from its app within 24 hours in December 2021.
It has already taken legal action against nine individuals and finfluencers, including stars of reality TV show Love Island, for promoting an unauthorised trading scheme.
On 11 July 2024 at a plea and trial preparation hearing at Southwark Crown Court the defendants each pleaded not guilty to 1 count of issuing unauthorised communications of financial promotions.
Nicola Hutchinson, a partner at Reeds Solicitors who is currently representing one of the nine influencers already being prosecuted, issued a critical comment on the latest action by the FCA.
Hutchinson said: “It is clear that the FCA is committed to bringing its prosecutorial weight to bear in the social media space.
“The offence is highly technical in nature and it is legitimate to ask whether the section was intended to, and does, criminalise the targeted conduct. That in turn raises the question whether criminal prosecution is the appropriate enforcement response, as opposed to civil law interventions.
“It might be argued that the FCA’s real intention is to send a loud messages to influencers that it is “watching” what they are doing, and that if that message is heard these prosecutions have already achieved their objective, whether or not any convictions follow. “
Robin has more than six years of experience as a financial journalist, most of which were spent at Citywire, and covers the latest developments in the investing, trading and currency transfer space. Outside of work, he enjoys reading literature and philosophy and playing the piano.
You can contact Robin at robin@goodmoneyguide.com
