FCA Wants More Regulated Firms Proactive on Social Media

Last week, the Financial Conduct Authority’s Director of Consumer Investments, Lucy Castledine, said at a Treasury Select Committee meeting that she wanted to see more regulated financial services firms and providers being more proactive on social media.

There has been a surge of what is known a ‘finfluencers’ on social media, i.e., social media ‘stars’ with high numbers of followers talking about and promoting many elements of financial services when they are tchnically not authorised or qualified to do so. 

Numerous individuals have been proescuted by the FCA, including social media influencers, for promoting:

• Unauthorized foreign exchange trading schemes on social media. The charges include issuing unauthorized financial promotions and providing
• Unauthorized financial promotions and advice on contracts for difference (CFDs) without proper authorization.

Last year, twenty finfluencers were interviewed ‘under caution’ by the FCA and nine have been sent to trial, due in 2027 and there will no doubt be more to follow:

Financial promotions can only be approved by FCA authorised firms as well as advice on the same can only be given by an authorised individual.

Comment

Even 25 years ago, we were campaigning against celebrity endorsement of regulated financial services products.  If you got enough money to ‘buy’ a big star punting your wares, then provided the advertsiement was signe off by the regulated firm then no problem.  At the time, this mean’t that some products that we considered poor value for money where securing more enquiries than they should dur to the celebrity endorsement.  In addition, and to be frank, if you think a free pen or gift voucher means you are getting the best over 50s life insurance then think again.

Finfluencers are a more recent phenomenon as social media has grown but if you are not authorised and regulated to promote such schemes or advice on them, nor are you a registered journalist, you are breaking the laws of various Financial Services and Markets Acts (FSMA), last updated in 2023. 

One thing should be known ss that journalists are broadly excluded from most of the FSMA, hence you seeing so called ‘finance experts’ on television and radio.  Despite many of them having no financial services qualifications, they are free to talk or write about subjects without fear of prosecution.  That said, whilst many financial journalists literally repeat what they have read or seen on variious websites such as our own, they cannot promote financial products but can explain in plain language some of the more difficult areas and we believe they have a valid function in raising the awareness of the public and the need to review finances regularly.