FCA cracks down on finfluencers over illegal financial promotions

These interviews, conducted under the FCA's criminal powers, were voluntary. Penalties for violations in this context may include fines and imprisonment of up to two years.

The FCA’s investigation centres on influencers, commonly called ‘finfluencers’, who promote foreign exchange and contracts for difference (CFD) trading. CFDs are high-risk financial instruments used to speculate on asset prices, including foreign currency values.

The FCA has expressed additional concerns over unlawful promotions in areas like credit lending and debt solutions. Ongoing searches aim to identify influencers promoting financial products without appropriate authorisation. As part of these efforts, the regulator has issued 38 warnings against social media accounts that may be involved in illegal financial promotions.

An increase in scams targeting younger audiences has coincided with the rise of finfluencers. Nearly two-thirds of individuals aged 18 to 29 reportedly follow social media influencers, with 74% indicating a degree of trust in their advice. Many young followers report that these influencers have impacted their financial decisions.

How finfluencers influence young investors and promote financial products

The rise of ‘finfluencers’ on social media platforms has significantly impacted financial decision-making, particularly among younger audiences. Finfluencers offer advice on topics ranging from investment strategies and personal finance tips to complex financial products, such as cryptocurrency and forex trading. Their content, often styled as relatable and easy to understand, appeals, especially to younger audiences who may feel alienated by traditional financial services and are more comfortable learning from informal, social media-based sources.

Many finfluencers have also forged partnerships with financial services companies, further promoting financial products to a broad audience. Influencers are often paid to endorse trading platforms, robo-advisors, or even specific investment products, which increases exposure for these brands but also raises questions about transparency. In some cases, young audiences may not be aware that the influencer’s advice is incentivized, potentially compromising the objectivity of the information. This trend has added to the complexity regulators face in ensuring that influencer-led promotions align with advertising standards and transparency requirements.