What has happened?

The Financial Conduct Authority (FCA) is interviewing twenty so-called "finfluencers" under (criminal) caution as part of a targeted action against the illegal promotion of financial services products. Additionally, the FCA has issued 38 alerts concerning social media accounts that may be involved in unlawful promotions.

Finfluencers are social media influencers who use their platforms to promote financial products. The FCA's action comes amid rising concerns that significant numbers of young people, who often trust and follow finfluencers, are falling victim to scams. According to FCA data, nearly 62% of 18 to 29-year-olds follow social media influencers, with 74% trusting their advice and 90% reporting they have been influenced to change their financial behaviour.

How does this fit into wider action?

Regulatory scrutiny of influencers is not new. Earlier this year, the FCA brought charges against nine individuals and finfluencers for promoting an unauthorised trading scheme on social media. This followed its publication of finalised guidance on financial promotions on social media in March 2024.

For years, the Advertising Standards Authority (ASA) has been playing whack-a-mole with influencers who fail to label content as advertising upfront or otherwise breach advertising rules. Despite introducing initiatives such as a dedicated page highlighting repeat offenders, the ASA's limited enforcement powers have somewhat constrained its effectiveness.

The Competition & Markets Authority (CMA) has also taken steps to address misleading influencer advertising. It has secured undertakings from Facebook to prevent hidden advertising on Instagram and from individual influencers to improve disclosures in their posts.

Despite considerable efforts from these three regulators, there remains scepticism about the effectiveness of measures taken so far. However, the FCA is now stepping up its actions by using its criminal powers to investigate and prosecute individuals for misleading advertising of financial products. Similarly, the CMA plans to utilise new direct enforcement powers available under the Digital Markets Competition and Consumers Act 2024 including powers to issue significant fines for those who get things wrong without having to go to court (more here).

What does this mean for you?

Given that both influencers and the underlying brand can potentially be liable, care needs to be taken to ensure that relevant Codes and laws are not beached.

As regulators continue taking more aggressive steps against misleading influencer advertising, it is possible these measures will start to turn the dial in the regulators' favour.