The UK’s financial watchdog has followed up a warning issued against ‘finfluencers’ earlier this year with an investigation against some social media personalities.
Twenty finfluencrs, to be exact, are being interviewed by the Financial Conduct Authority (FCA) who the regulator suspects of ‘touting financial services products illegally’.
A further 38 alerts have been issued against social media accounts operated by influencers for potentially containing unlawful promotions. The FCA’s main concern about these accounts and promotions is the potential for people to be scammed.
Fraud has become a front-and-centre issue for UK finance regulators, with the amount lost to fraud increasing 5% year-over-year to £571.7m in H1 2024. New regulations and policies have been introduced to counter fraud, notably the Payment Systems Regulator (PSR) reimbursement rules and new powers for banks introduced by HM Treasury.
The FCA itself has noted that increasing numbers of young people are falling victim to scams, partly blaming influencers. The regulator states that 62% of 18-29 year olds follow social media influencers, with 74% stating they trust the advice of these influencers and nine in 10 stating that they have been encouraged to change financial behaviour.
“Finfluencers are trusted by the people who follow them, often young and potentially vulnerable people attracted to the lifestyle they flaunt,” said Steve Smart, FCA Joint Executive Director of Enforcement and Market Oversight.
“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.”
Social media influencers getting involved in financial products is nothing new, and neither is controversy around this practice. For example, Jake Paul, one of the world’s most widely known and followed social media personalities, has sometimes found himself facing regulatory trouble due to cryptocurrency activity.
The FCA does not seem to be particularly concerned with the likes of Jake Paul, it is important to note, instead focusing on influencers whose bread-and-butter is promoting financial products.
In the context of the UK’s debate around fraud, the FCA’s interviews of social media influencers seem to back up some of the assertions made by financial institutions lately. The aforementioned PSR regulations require firms to reimburse victims of authorised push payment (APP) fraud to the tune of up to £85,000.
Financial institutions like Barclays, Lloyds and Revolut have all argued that social media should play a role in reimbursing customers too – though the latter’s statements have aged slightly after a BBC Panorama investigation into its own fraud prevention standards.
It is also important to note that the FCA’s spotlight on social media does not just fall on influencers but also on companies. In its March warning, the regulator cautioned fintech firms to ensure any social media activity, whether in partnership with an influencer or not, must meet official guidelines.
