The Financial Conduct Authority (FCA) has taken steps to firmly crack down on the growing number of financial “influencers” who market financial services, and advice on social media platforms without the necessary authorization. The FCA issued a wide-ranging warning to video creators, advising them to either comply with financial promotion rules or face regulatory action against potentially harmful content. The FCA notes a significant rise in unregistered financial promotions, exaggerated claims about investments, and recommendations related to complex, high-risk products, such as speculative shares, forex trading, or cryptocurrencies. According to the FCA, many influencers are unaware of the obligations involved in providing financial advice, even if it is done loosely.
FCA Legal Framework
The FCA strictly regulates financial promotions, which extend not only to banks, brokers, and fintechs but also to social media personalities who encourage people to make financial decisions. The regulations require that all promotional materials must be:
Clear, fair, and non-misleading
Supported by suitable risk warnings
Approved by an FCA-approved firm, unless the originator has their authorization
In recent guidance, the FCA has emphasized that merely suggesting a particular investment or inviting followers to subscribe to a product may constitute regulated activity. The authority affirmed that influencers should comply with the same rules as traditional firms in marketing financial products to consumers.
Customers at Risk
Many of these influencers lack the necessary qualifications to practice in finance. They often lack the technical skills or regulatory knowledge to inform public financial decisions. The Financial Conduct Authority has found most risks associated with this:
- High-risk investments: Promoting high-risk investments without disclosure of potential losses.
- Fraudulent Schemes: Supporting potentially fraudulent unregulated cryptocurrency schemes.
- Get rich quick: Offering “get rich quick” tales that distort the truth about investing.
- Volatility of the Market: Not warning viewers of the volatility of the market.
Appealing to younger, inexperienced users—often who see influencers as more accessible or trustworthy than formal financial institutions—makes the FCA convince itself that these actions are especially dangerous.
Paid Partnership
The issue has worsened with the emergence of sponsored posts. Influencers earn by partnering with fintech firms, but many fail to clearly disclose these deals. The Financial Conduct Authority considers such behaviour to be deceptive and unlawful under UK law.
The rules require businesses to label any financial promotion in a contract as an advertisement and ensure it meets compliance standards. The FCA has recently encouraged others to seek the requisite approvals on promotional materials and enforced measures against several influencers for misleading advertising.
FCA Campaigns
The FCA has taken proactive steps to educate influencers and creators in response to these issues. It has teamed up with platforms, issued guidelines, and warned influencers to help spot harmful content.
In addition, the regulator reminded producers that they could face criminal prosecution, a ban, or a fine for failing to comply with financial promotion rules. The FCA encouraged influencers to delete or edit content that violated the regulations in several cases by directly contacting them.
Social Media
Aside from targeting individuals, the FCA has engaged with social media platforms to advocate for stronger regulation. It urged companies such as TikTok, Google (YouTube), and Meta (Instagram) to take greater responsibility for detecting and removing information that is not in line.
The FCA recommended collaborating with authorities to identify repeat offenders, improving ad approval processes, and implementing enhanced content filters. The FCA believes that sites must be more proactive about stopping financial damage from uncontrolled content, even if most of them comply with community guidelines.
Finfluencers Responsibility
The FCA does not ban social media updates on financial education or personal finance. In fact, it has been observed that many artists provide valuable content by helping people save, budget, and learn the basics of finance. It sets a firm line: once creators promote products or give investment tips, they must follow the law.
FCA
The FCA has made it clear that honesty is required for influence in a digital world where anyone can become a voice of finance. Regulators aim to create safety, transparency, and order as social media finance rapidly grows.
The FCA warns: promote responsibly or not at all. This message is key as platforms, creators, and regulators adapt to a changing landscape. The FCA encourages responsible behaviour, as it recognizes the significant influence of financial advice on individuals’ lives and livelihoods.
