Tom Selby, head of retirement policy at AJ Bell, comments on the FCA’s joint warning with ASA to ‘finfluencers’ over the risks of promoting ‘get rich quick’ schemes:
“Savers and investors are increasingly turning to ‘finfluencers’ on social media channels like Twitter and Tik Tok to guide their financial decision-making. There has also inevitably been a surge in paid-for promotions of financial products, particularly cryptocurrencies, in recent years.
“Anything that helps engage people, and in particular younger people, with their finances has the potential to be a hugely powerful force for good. If ‘finfluencers’ are able to explain to their followers key concepts like compounding and the importance of saving for the future in an engaging way, that could in turn enable people to make better informed financial decisions.
“However, there is also clearly a significant risk of finfluencers spreading misinformation or encouraging high-risk behaviour, such as day trading in individual stocks, without properly explaining those risks. All-too-often, social media looks more like the financial Wild West than a safe space to learn about sensible financial planning.
“It is therefore critical regulators engage with finfluencers to ensure the messages being delivered to savers are not misleading. And where any social media post involves the promotion of a regulated financial product, regulators need to ensure finfluencers are held to the same standard as more traditional advertising.
“One of the big challenges facing UK regulators is that, when it comes to social media, finfluencers are often unregulated individuals pushing unregulated products in a world which is incredibly hard to track and monitor. In the worst-case scenario, finfluencers could encourage followers to invest in scam schemes and end up losing everything. The fact a lot of this activity happens outside of the regulated space is likely why the FCA is focusing on educating those pushing out messages to their followers.”
