FCA clamping down on rogue finfluencers

Social media personalities who tout financial products or services illegally are being targeted by regulators.

Online influencers often use their platform to promote financial products and give advice to their followers.

Although many are acting legitimately and within the law, the Financial Conduct Authority (FCA) is concerned that others are operating illegally and without authorisation.

The regulator also believes that some so-called finfluencers are using “the pretence of a lavish lifestyle, often falsely, to promote success”.

Watchdog steps up action against finfluencers

This week, the FCA has made three arrests and authorised criminal proceedings against three people.

It’s also issued 50 warning alerts, sent seven cease and desist letters and invited four finfluencers for interview.

This was carried out as part of a “global week of action” against unlawful finfluencers, alongside regulators in Australia, Canada, Hong Kong, Italy and the United Arab Emirates.

“Our message to finfluencers is loud and clear,” said Steve Smart of the FCA.

“They must act responsibly and only promote financial products where they are authorised to do so - or face the consequences.”

Why you can’t rely on social media stars

Under the law, regulated financial advisers must follow strict rules and standards.

So any advice you get must be in your best interests and appropriate for you.

And if you’re not happy with the service you received, you can complain or escalate it to the Financial Ombudsman Service.

But that’s not the case with finfluencers.

They’re under no obligation to act in your best interests.

They don’t even have to fact-check any claims they make or verify if the products they’re promoting are genuine.

So if you follow a finfluencer, take their advice and lose money as a result, there’s nothing you can do.

It’s also important to remember that social media stars aren’t speaking to you personally.

They’re trying to engage with a mass audience and get as many clicks and likes as they can.

So unlike a genuine financial adviser, they can’t and don’t know what’s right for you, your current situation and your future goals.

How to protect yourself from bad financial advice

If you want to be sure that you’re getting financial advice from a trusted source, there are several steps you can take.

Check for FCA accreditation

Find out if the person or company offering financial advice or promoting certain products is FCA-regulated on the watchdog’s website.

Do your own research

If an influencer is promoting a financial product, look for reviews and comments on platforms other than social media.

Be cautious about high-risk investments

Don’t rush into high-risk investments that promise quick returns, even if your favourite influencer is plugging them.

Some finfluencers might have thousands of followers, but that doesn’t mean they’re qualified to give financial advice, or even acting lawfully.

So don’t take what they say at face value.

Check out our guide on getting financial advice to find out more about finding a reputable, qualified adviser.