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Finfluencers, or financial influencers, need to check the products they promote to ensure they are not breaking the law or putting social media followers’ money at risk, the City regulator has warned.
The warning comes as a total of 20 unnamed finfluencers are being interviewed voluntarily by the Financial Conduct Authority (FCA) under caution.
The FCA said there has been a significant increase in finfluencers in recent years.
Social media influencers use their platform to promote financial products and share insights and advice with their followers.
The authority highlighted issues with people not being FCA-authorised and being unqualified to give financial advice to the younger and often impressionable age groups following them.
The FCA has also issued 38 alerts against social media accounts operated by finfluencers which the regulator said may contain unlawful promotions.
Nearly two-thirds (62%) of 18 to 29-year-olds follow social media influencers, with three-quarters (74%) of those saying they trust their advice and nine in 10 young followers saying they have been encouraged to change their financial behaviour, the regulator said.
As part of its work, the regulator has been looking into finfluencers promoting foreign currency and contracts for difference (CFD) trading. CFDs are investment products used to bet on the price of an asset, such as the price of foreign currencies.
The FCA also has concerns around the promotion of credit lending and debt solutions. It will continue to carry out searches to identify and alert on those promoting financial products or services without appropriate permissions.
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.”
The regulator said people should check the FCA’s warning list before making decisions about how to invest their money.
Its InvestSmart page also contains information to help people who are weighing up investment decisions.