Nine ‘finfluencers’ charged in FCA crackdown

The financial industry regulator, the Financial Conduct Authority (FCA), has charged nine ‘finfluencers’ – individuals that give unlicensed financial advice on social media – in a crackdown on financial misinformation and exploitation, which can be rampant on social media platforms.

One of the nine, Emmanuel Nwanze, was charged with running an unauthorised investment scheme and issuing unauthorised financial promotions. The FCA alleges that, between 19 May 2018 and 13 April 2021, Nwanze used an Instagram account to provide advice on buying and selling Contracts For Difference (CFDs) when they were not authorised to do so.  CFDs are well known for being high-risk investment products that are used to bet on the price of an asset.

The FCA is intent on making an example out of the nine to discourage further unregulated advice of this nature.

Six of the defendants appeared before Westminster Magistrates Court on 13 June 2024. A further three with appear before the court on the 3 July.

What is a ‘finfluencer’?

Finfluencer is a relatively new term, used to describe a content creator who operates on social media to promote financial products and services to their audience. What separates a finfluencer’s advice from regulated financial advice is the finfluencer is often unqualified, unauthorised and unregulated. This means that it is common for them to promote risky investments, with no understanding of the consequences, often to the detriment of their audience and pure financial gain to them.

Finfluencer derives from the term ‘influencer’ which, in marketing and social media terms, refers to a person with the ability to influence viewer’s opinions on social media or video sharing platforms like YouTube.

The problem with finfluencers

If an finfluencer is knowledgeable about the product or service they promote and their content is considered 'responsible' by the FCA, finfluencers can actually be beneficial. They help buyers evaluate their choices and understand the variety of products available to them in a simple and easy to digest way.

The problem is that there are many examples like the nine that have been charged by the FCA, where this is not the case. Many finfluencers promote illegitimate 'get rich quick' schemes or act irresponsibly in their communications, with endorsement of questionable crypto investments and ‘memestocks’ being a common trend. In such cases, less knowledgeable audience members get exploited and even scammed.

Aside from the obvious detriment to the victims of this kind of unlicensed advice, the wider reaching implications is that this misinformation leads to a general distrust of the financial services industry, further discouraging financial literary and ultimately hurting the consumer.

If you are concerned about possible misinformation and are seeking real, impartial and fully qualified financial advice, book a free non-committal initial consultation with one of our qualified advisers who will be happy to see if we can help. Alternatively, you can give us a call on 0333 323 9065 to get in touch with a member of our team to find out more.

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

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