Finfluencers need to check the products they promote to ensure they are not breaking the law or putting followers’ money at risk, the City regulator has warned.
Social media influencers may use their platform to promote financial products and share insights and advice with their followers.
The Financial Conduct Authority (FCA) said there has been a significant increase in finfluencers in recent years.
But it highlighted issues with people not being FCA-authorised and being unqualified to give financial advice to the younger and often impressionable age groups following them.
It said 20 unnamed finfluencers are being interviewed voluntarily by the FCA under caution.
The FCA has also issued 38 alerts against social media accounts operated by finfluencers which the regulator said may contain unlawful promotions.
Nearly two-thirds (62%) of 18 to 29-year-olds follow social media influencers, with three-quarters (74%) of those saying they trust their advice and nine in 10 young followers saying they have been encouraged to change their financial behaviour, the regulator said.
As part of its work, the regulator has been looking into finfluencers promoting foreign currency and contracts for difference (CFD) trading. CFDs are investment products used to bet on the price of an asset, such as the price of foreign currencies.
The FCA also has concerns around the promotion of credit lending and debt solutions. It will continue to carry out searches to identify and alert on those promoting financial products or services without appropriate permissions.
Steve Smart, joint executive director of enforcement and market oversight at the FCA, 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.”
Rocio Concha, Which? director of policy and advocacy, said: “Social media influencers can build up a huge fanbase of millions of people who value their statements and advice and may choose to act on them – and this could prove very costly if people are encouraged to make unnecessarily risky decisions.
“The FCA is right to remind finfluencers of their legal responsibilities. The regulator should not hesitate to take action against any found to be breaking the rules, as this would send a strong message that social media influencers may be able to reap large rewards, but they will also be held responsible for their posts.”
The regulator said people should check the FCA’s warning list before making decisions about how to invest their money.
Its InvestSmart page also contains information to help people who are weighing up investment decisions.
