Twenty social media influencers are being interviewed under caution by the UK financial regulator as part of a crackdown on illegal ‘finfluencers’.
The individuals were interviewed voluntarily using the Financial Conduct Authority’s criminal powers.
The FCA also issued 38 alerts against social media accounts operated by social media influencers, which it said “may contain unlawful promotions”.
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It comes as the regulator says increasing numbers of young people are falling victim to scams, in which “finfluencers…often play a part”.
The watchdog states that nearly two-thirds of 18 to 29-year-olds follow social media influencers, and three-quarters of those said they trusted their advice. Nine in 10 young followers say they have been encouraged to change their financial behaviour by an influencer.
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.”
Nine people previously charged for promoting unauthorised trading schemes
The FCA did not name the 20 individuals it had brought in for questioning but, in May, reality television stars were among nine people charged with promoting unauthorised trading schemes on Instagram.
Emmanuel Nwanze, 30, and Holly Thompson, 33, offered advice on trading high-risk foreign currency derivatives over the social media platform between May 2018 and April 2021 without required authorisation from the regulator, the FCA alleged.
Lily Megson, policy expert at My Pension Expert, said: “It’s no secret that personal finance content on social media has exploded in popularity, with millions turning to platforms like TikTok, Instagram and Facebook for guidance, with mixed results.
“At its best, this content can serve as an engaging and accessible way to get an informative overview of certain fiscal concepts. But at worst, it can be ill-suited to the financial situations of those consuming it – or even just wildly inaccurate – leading people to poor financial decision-making.”
In a bid to drive following and engagement, many online creators treat their tips as gospel, she added. “But this ignores the simple fact that successfully tackling your personal finance planning is far from one-size-fits-all. People’s financial circumstances vary so hugely that guidance given on videos viewed by hundreds of thousands just cannot reliably meet the needs of all watching.”
FCA research released in 2021 found 58% of under-40s who had invested in high-risk products, like crypto assets, had been directly encouraged to do so by posts they had seen on social media. Celebrities with large followings, such as Kim Kardashian, have been among those promoting these risky holdings.
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