Financial influencers to face regulations

FINANCIAL INFLUENCERS TO FACE REGULATIONS

The Financial Times recently reported on the increasing number of financial influencers giving quick-fix finance tips and investment advice on social platforms.

The UK’s Financial Conduct Authority is taking steps to crack down on influencers who don’t warn their followers about the risks they take when investing. The FCA are proposing new measures to police and monitor the promotion of high-risk investments online. The FCA regulations however, will not cover cryptocurrency, which falls outside of their remit.

This week we saw MPs propose an amendment to the financial services and markets bill to set personalised financial guidance as a new category of advice.

According to recent research, 8% of adults in the UK have sought regulated financial advice over this past year. This suggests people are looking for other resources, which potentially includes turning to social media and ‘finfluencers’.

We’re in a digital age where many individuals rely on influencers to learn about something new or everyday life hacks, and where there is a lack of financial education within the education system, it makes sense for the younger generation to turn to social media.

However, many products like NFTs for example, have been promoted by influencers, only for those investments to fail or end in claims. Similarly, with ‘FX trading’ and ‘debt solutions’.

There are various specialist regulations for influencers for alcohol, gambling and smoking so it makes sense to tighten the rules on financial advice too. Hopefully, the regulations will provide more transparency and legitimacy within social media realm.

Before making any significant financial decisions, always conduct your research and seek qualified, regulated advice.

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