Regulators crackdown on ‘finfluencers’

Regulators have announced this morning that they have joined forces for an international crackdown to protect social media users from rogue promotions by some financial influencers, or “finfluencers”

The week of action started on June 2 and involved the Financial Conduct Authority (FCA) in the UK as well as regulators from Australia, Canada, Hong Kong, Italy and the United Arab Emirates. In the UK, the FCA has issued 50 warning alerts, which the regulator said will result in more than 650 take down requests on social media platforms and more than 50 websites operated by unauthorised finfluencers. It has also sent seven “cease and desist” letters, and invited four finfluencers for interview. The FCA said it has also made thee arrests with the support of the City of London Police and authorised criminal proceedings against three people.

Please see various comments from legal experts about this below.

COMMENTS

Terry Green, Social Media partner at international law firm Katten Muchin Rosenman LLP (Katten) says:

“Whilst there has been a lot of coverage on protecting people from harmful behaviours and illegal materials online, the Online Safety Act’s wide remit also mandates the protection of people from fraud and financial offences. This includes rogue financial promotions especially in social media and messaging services.

Online platforms will be expected to assess the risk of people being defrauded or being taken advantaged of by people carrying out regulated activities when they have not been authorised by the FCA, such as providing financial advice or conducting financial promotions. The Online Safety Act specifically highlights this as one of the 17 types of illegal content and online platforms must conduct a risk assessment on in relation to the likelihood and harm of this occurring on their platform. They must also outline and put in place ways in which these risks and harms are mitigated. These risk assessments should have been in place from March 2025 and measures are expected to be in place from September 2025.

Whilst the FCA has targeted specific social media users, Ofcom will go after the social media and online platforms that are enabling this. We may expect to see more cooperation between the FCA and Ofcom to tackle these types of content online.”

Caroline Black, Consultant at Gherson Solicitors comments:

“This is a hugely positive development in the important role that Regulators have in protecting the public from rogue traders and fraudsters. Although social media platforms are notoriously difficult to police, the deterrent effect of a criminal investigation should not be underestimated.  We can expect more action of this type to come”.

Karl Foster, Financial Services Partner at Spencer West LLP says:

“Regulators have taken an increased interest in the activities of the so-called “finfluencers” (influencers promoting financial products) as the power and popularity of social media evolves, particularly with younger demographics. Those pushing stories of how large portfolios can be amassed and profits made, may not realise that once they begin to reference products, specific stocks, or tokens, they venture into giving investment advice which is a regulated activity. Unauthorised financial promotion in the UK is a criminal offence, punishable by a fine and/or up to 2 years in prison.

As with the consumption of news via social media platforms, traditional methods are being replaced. In terms of investor education via social media, a higher potential for an advice gap, risk of misinformation, or even scams can be expected. Social media provides the perfect space for people to operate beyond the regulatory scope of regulators. Whilst not entirely without regulation and with enforcement being taken, the possibilities of oversight and redress are limited with regulators increasingly dependent on the good will of the social media platforms themselves to provide the practical steps to help minimise the risk of unruly advice. In a world with little accountability, it becomes increasingly difficult to determine who might be a reckless, or even a malicious, actor.

From an FCA perspective, the protection of consumers from harm and ensuring the integrity of the financial system are overriding statutory duties. Therefore, taking action against non-regulated individuals who could cause harm (willingly or unwittingly) is likely to encourage the adoption of regulatory oversight by those who wish to continue practicing or even the cessation of unregulated activity by those who don’t. For a number of years now, the reduction in high-risk investment by those with a low tolerance of risk (think general prohibition on promotion of cryptoassets for example) has been a goal of the FCA; this latest action is complimentary to and enabling of that goal. Only a few months ago, the Treasury raised the issue of fraud and finfluencers the with the FCA.

It is important to note that this is a global issue and not just for the UK. Recent action in India to ban Asmita Patel, the influential YouTuber, and this coordinated action by regulators from around the world, demonstrates the importance of regulatory cooperation in today’s financial services landscape.

The importance of such co-operation will only increase as defi is brought into the wider financial services landscape. Unsurprisingly, given the views that such finfluencers drive on social media platforms, and consequently the revenue that generates, the Treasury Committee’s reference to Meta taking a long time to respond to takedown requests comes as no surprise, notwithstanding a social media platform’s need to follow a diligent process in actioning such requests.”