In a targeted action, the U.K.’s Financial Conduct Authority (FCA) is launching a crackdown against illegal finfluencers amid growing concern about the risk of investor harm.
The regulator said 20 so-called finfluencers are being interviewed under caution — the regulator is exercising its criminal enforcement powers to question individuals suspected of a criminal offence — as it investigates the possible illegal touting of financial products on social media.
The subjects of the interviews, who can’t be named, aren’t registered nor qualified to give financial advice, the FCA noted.
“Finfluencers are trusted by the people who follow them, often young and potentially vulnerable people attracted to the lifestyle they flaunt,” said Steve Smart, joint executive director of enforcement and market oversight with the FCA, in a release.
“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,” he said.
The FCA reported that younger investors are increasingly being victimized by investment scams, which often involve influencers, as younger investors place greater trust on information from these sources.
It said that 62% of 18- to 29-year-olds now follow social media influencers, and that 74% of these investors said they trust the influencers’ advice.
Alongside its investigation, the FCA issued investor alerts against 38 social media accounts for suspected unlawful promotional activity.