Watchdog taking action against finfluencers

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

Nearly one in five Brits (18%) now use social media to get financial advice, according to Aqua.

That’s almost as many as the number who turn to financial advisers (21%) or news websites (24%) for information.

But you don’t always know if your source is reliable, and many so-called finfluencers aren’t qualified to give financial advice.

So the Financial Conduct Authority (FCA) wants to do something about it.

What are finfluencers?

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 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”.

What’s the FCA doing to tackle the problem?

The FCA recently led a global “week of action” involving 17 regulators around the world.

Together, they had one simple aim: protecting people from harmful or misleading financial content online.

Among the steps taken by the FCA were securing a guilty plea from reality TV personality Aaron Chalmers for illegal financial promotions and taking action against others suspected of similar offences.

The watchdog also issued dozens of warnings about unauthorised firms and individuals and asked for the removal of over 100 social media accounts sharing illegal content.

These accounts had shared more than 1,200 illegal financial adverts, reaching at least 2.3 million UK users.

In addition, the FCA is calling on social media platforms to do more to stop harmful content before it reaches people.

“This collective push with international partners is vital in helping to protect millions of consumers from harm,” said Steve Smart of the FCA.

“We will only make real progress in the fight against financial crime if every part of the system plays its role - including social media firms.”

Why you can’t rely on social media for financial advice

Many influencers have built their social media following on offering financial advice.

But in many cases, they won’t be regulated specialists in this area.

And that means they don’t have to: 

• fact-check their claims
• act in your best interests
• make sure the products they’re promoting are genuine and legitimate

This means that if you follow an influencer’s advice and lose a lot of money, there’s nothing you can do.

Another problem is that social media stars are trying to engage with a mass audience, not you specifically.

So they can’t know your specific situation, your goals and your priorities, which means they can’t always give appropriate advice.

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.