The Financial Conduct Authority (FCA) has collaborated with global regulators to tackle illegal financial promotions by unauthorised social media influencers, commonly known as finfluencers. Starting June 8, a week-long initiative saw participation from nine regulatory bodies across Australia, Canada, Hong Kong, Italy, the United Arab Emirates, and the United Kingdom.
Key Actions in the UK
- Warnings Issued: 50 alerts targeting illicit social media content.
- Cease-and-Desist Orders: Seven letters sent to offenders.
- Law Enforcement Involvement: Three arrests made with City of London Police assistance.
- Legal Proceedings: Criminal charges filed against three individuals; four finfluencers summoned for interviews.
- Expected Outcomes: Over 650 content takedown requests on social media and closure of more than 50 unauthorised websites.
“Finfluencers must promote financial products only if authorised, or face serious consequences,” said Steve Smart, FCA’s joint executive director of enforcement and market oversight.
Regulatory Challenges
The FCA first highlighted risks of social media investment promotions in March 2024. James Alleyne, a partner at Kingsley Napley LLP’s Financial Services Regulatory team, noted the FCA’s proactive approach:
“The regulator has diligently monitored social media for suspicious accounts and pursued criminal action against those offering unauthorised advice,” Alleyne stated.
Alleyne pointed out that finfluencers promoting high-risk products drive significant consumer harm. A major hurdle is the overseas operation of many accounts, necessitating international cooperation for effective enforcement.
Global Collaboration
Giang Hughes, business support manager at Simplify Consulting, welcomed the FCA’s joint efforts with global regulators:
“It’s encouraging to see coordinated action, but are the FCA’s resources, like warning lists, reaching vulnerable social media users?” Hughes questioned.
Hughes criticised the lack of robust governance on social media platforms, which enables finfluencer misconduct. He noted that legal actions often follow substantial investor losses, leaving victims with limited recourse.
Ongoing Concerns
- Recurring Offenders: Bad actors may reappear under new identities after receiving cease-and-desist orders.
- Data Gaps: Limited data from social media platforms hinders assessment of regulatory impact.
- Platform Responsibility: Social media companies must strengthen oversight to protect consumers.
Hughes emphasised the need for deeper regulator-platform collaboration:
“Unqualified individuals offering ‘advice’ without accountability undermines the regulated financial advice sector. Social media platforms must take their responsibilities seriously,” he urged.
Conclusion
The international “Week of Action” signals a unified stance against rogue finfluencers. The FCA’s ongoing efforts underscore its commitment to consumer protection, but sustained cross-border and platform-level cooperation is crucial to address this evolving threat.
