The UK’s Financial Conduct Authority’s (FCA) ongoing game of “whack-a-mole” with so-called ‘finfluencers’ may become even more challenging, according to a regulatory official.
Speaking to the Treasury Select Committee (TSC) on April 30, Lucy Castledine, Director of Consumer Investments at the FCA, shed light on the regulator’s ongoing struggles in tackling the growing wave of financial influencers.
These ‘finfluencers’ – social media personalities who promote financial products – have long been a thorn in the FCA’s side. Castledine revealed the regulator has received 25,000 reports of unauthorised business in 2024 so far.
Currently, the FCA is required to request individual takedowns for offending accounts; an effort influencers can easily sidestep by creating new profiles. Castledine told the committee social media platforms need to take greater responsibility.
“The Big Tech platforms have got the technology to identify this; they need to be proactive about it, otherwise we will be in a continued whack-a-mole,” she said. “That is the big call to action that we would like to see.”
Rising legal risks for ‘finfluencers’
The watchdog stepped up its monitoring efforts last year, warning many of these influencers are promoting unregulated or unauthorised financial products without FCA approval.
Influencers found guilty of promoting unregulated services currently face up to two years in prison. However, Castledine said the FCA is considering increasing the maximum sentence to five years for added deterrence.
Steve Smart, Joint Executive Director for Enforcement and Market Oversight at the FCA, noted during the discussion that such a change would require new legislation and confirmed the regulator is in talks with the Treasury and Home Office.
The need for stronger consequences is clear, but may be difficult to communicate as no related court cases have yet concluded.
“In the FCA we do a lot of work fighting crime, and we do a lot in the prosecution and pursuit space. I think we have charged five individuals in the last three months with fraud, but none of those cases will come to court before 2027,” Smart said. “The time that the UK judicial system is taking at the moment is an issue for us.”
TSC chair Meg Hillier commented that “jaws dropped in the room” when Smart revealed no one has yet been prosecuted.
FCA’s growing challenges ahead
As the FCA contends with the current challenges, its job is about to get even harder. Under the UK’s new crypto regulatory framework, the regulator will now oversee Bitcoin and related crypto activities.
Crypto scams, often driven by social media promotion and schemes like rug pulls, are on the rise. The FCA will need to develop additional regulations to counter these risks as the role of social media in financial promotion continues to grow.
“We recognise that there is an awful lot of work to do, and that the online platforms clearly have a responsibility here too,” Hillier concluded.
“We will be picking up with the [FCA] chief executive, who is due in front of us in June, on some areas that we have touched on.”
