FCA cracks down on illegal ‘finfluencers’

Where do you go when you need financial advice? With social media increasing in popularity in recent years, many are turning to ‘finfluencers’ to answer their questions about money.

Finfluencers are now on the radar of the Financial Conduct Authority (FCA), who are stepping up efforts against those who might be giving out illegal financial advice.

What are ‘finfluencers’?

‘Finfluencer’ is a mashup of ‘financial’ and ‘influencer’. They are social media personalities who share money tips and advice, through platforms like Instagram, TikTok, and YouTube. They can have a big influence on their followers’ financial decisions.

Why are ‘finfluencers’ so popular?

Finfluencers create short, engaging videos that make learning about finance feel accessible. And they often share their own experiences - mistakes, successes, and everything in between - which makes them more relatable.

So, what’s the catch?

Some finfluencers do offer helpful advice, but many of them aren’t qualified to do so. Here are some potential risks:

unregulated advice - finfluencers are often unregulated and may not be aware that promoting a financial product without FCA authorisation could be a criminal offence.
not acting in your best interests - some finfluencers may promote products or services for personal gain, rather than your best interests.
wrong and misleading information - without proper research and expertise, finfluencers can share incorrect information - sometimes deliberately.
emotional influence - their success stories can lead to unrealistic expectations and rushed financial decisions.

The FCA's role

The Financial Conduct Authority (FCA) regulates the financial services industry in the UK. It is concerned about the rise of finfluencers, and the potential harm they could cause.

Steve Smart, joint executive director of enforcement and market oversight at the FCA said:

'Finfluencers are trusted by the people who follow them, often young and potentially vulnerable people attracted to the lifestyle they flaunt.’

'Finfluencers need to check the products they promote to ensure they are not breaking the law and putting their followers' livelihoods and life savings at risk.'

What the FCA is doing

The FCA is cracking down by:

interviewing finfluencers voluntarily using their criminal powers. This means finfluencers may be charged with a crime. Potential penalties include fines and up to two years in prison.
issuing warning alerts against social media accounts that are engaging in illegal promotions

How to avoid fake finfluencers and bad advice

With so many finfluencers out there, it can be tricky to figure out who’s legit and who’s not. Here are some tips to help keep yourself safe:

check their qualifications - just because they have a tonne of followers doesn’t make them an expert.
do your research - check out what others are saying about them and see if they have a solid follower base. Always research any advice they suggest. And remember that no investment is completely risk-free.
look for transparency - a reliable influencer should share any partnerships or sponsorships. If they’re advertising a product, they should be upfront about it.
be aware of scams – and don’t take everything at face value. If they say a certain investment is a surefire way to get rich, it could be a scam. If it sounds too good to be true, it probably is.

Where can I get regulated financial advice?

For trustworthy and regulated advice, it’s best to use a financial adviser who is authorised by the FCA. They will look at your individual circumstances and give you advice tailored to your situation.

You can check the Financial Services Register online to make sure a company or individual is authorised.

Where can I get reliable personal finance content?

Check out our finance guides for information and tips on credit cards, loans, mortgages and other money matters. Written by experts, we aim to answer all your burning finance questions - in an easy-to-understand way.

You can also read our blog on how to make your financial goals achievable.

Disclaimer: We make every effort to ensure content is correct when published. Information on this website doesn't constitute financial advice, and we aren't responsible for the content of any external sites.

Adele Kitchen

Personal Finance Writer

Adele is a personal finance writer with more than 10 years in the finance industry behind her. She writes clear and engaging guides on all things loans for Ocean, as well as contributing blogs to help people understand their options when it comes to money.