It’s hardly surprising in the current digital age of social media apps such as Tik-Tok, YouTube Instagram and Twitter that the rise of the influencer has spread to financial services. So-called “fin-fluencers” (influencers generating social media content regarding financial topics and investments) are increasingly popular. The FCA is concerned about consumer harm so if your firm is contemplating partnering with influencers, you may want to read on...
Many would argue that products and services are becoming more accessible because of fin-fluencers, whose light-hearted and “easy to understand” jargon appeals and builds trust. With a large advice gap and a generation of keen DIY investor coming there is clearly a place for engaging commentary that empowers and enables people to make investments where these are in their interest. However, some fin-fluencers are using their status to promote unsuitable products and services, or to make false claims as to how they make their money, therefore causing potential consumer harm.
The FCA have warned of their concern that young investors are being targeted to invest in unsuitable or high-risk products using trading apps and / or following fin-fluencer advice. The FCA states it is working with other regulators to educate fin-fluencers who may be advising on or promoting financial products. Many fin-fluencers are unaware of the regulation around providing advice and making financial promotions.
The spotlight is certainly on fin-fluencers. In 2022 the FCA intervened in 1398% more promotions than in 2021, an incredible spike in activity and the regulator refers to its efforts in targeting bloggers and influencers as a big part of this. In the most serious of cases some fin-fluencers have been referred for criminal investigation.
A notable example of such interventions was the FCA’s decision in early 2022 to order the investment app Freetrade to stop all its marketing campaigns due to concerns over a partnership with a well-known fin-fluencer (as per the regulaor's Second Supervisory Notice). The FCA considered that this particular fin-fluencer’s videos could potentially lead viewers to believe that they could clear their debts by investing with Freetrade when positive returns could not be guaranteed.
Earlier this year, the regulator announced “significant improvements” to its digital tools had made it easier to detect and crack down on those offering illegal investment advice online.” No one can deny that fin-fluencers are here to stay but the point now is that the FCA is online watching them. If your firm is considering paying fin-fluencers, or otherwise partnering and condoning references to your products and services, it is worth considering how best to approach this and what the key considerations should be, from the consumer duty outcomes, through to conflicts and the fair clear and not misleading rule. If it would help to have a conversation, training or a policy in place, feel free to get in touch with us on contact@adempi.co.uk.