17 July 2023
If you are covering the FCA’s proposals for new social media guidance, please see the following comment from Rosie Hooper, chartered financial adviser at Quilter:
"The FCA is increasing its scrutiny of influencers and so-called ‘finfluencers’ touting crypto and other investment schemes. With its new consultation on financial promotions, the regulator is making it harder for promotions to be approved and is cracking down on harm occurring from unauthorised influencers communicating illegal financial promotions via social media.
"This is long overdue given the spate of social media posts over a number of years that have lured people into high-risk schemes that don’t state the real risks of falling victim to scams on social media which have skyrocketed over recent years.
"This crackdown is particularly needed during the cost-of-living crisis as people are more likely to turn to alternative sources with the promise of high returns being tempting for cash-strapped individuals without their eyes open to risks involved.
"The incoming Consumer Duty raises expectations of firms communicating financial promotions on social media higher than ever before. However, the powers of the FCA only goes so far and will not be enough to stop outright scammers. The importance of legislation to make social media platforms responsible for taking down scam ads in a timely manner via the Online Safety Bill is paramount. Stopping scam adverts when people’s cash is so stretched should be a priority for the government.
"For consumers of finance content on social media there are some tips to help ensure that you do not get caught out online and use what can be a good tool wisely:
Verify the credibility of the influencer:
"Make sure the influencer you're following for financial advice is qualified to give it. Look for their credentials, educational background, and any professional affiliations they might have. A legitimate financial adviser will usually list their qualifications in their profile. Be wary of influencers who are only famous for their social media presence, as they may not have the necessary expertise.
Do your own research:
"Don't rely solely on the advice given by influencers. Always conduct your own research to verify the information and ensure it aligns with your personal financial goals. This can include reading financial news, books, using trusted financial websites, and consulting with a professional financial adviser.
Beware of "get rich quick" schemes:
"If an offer sounds too good to be true, it probably is. Legitimate financial growth typically involves time, patience, and wise investment strategies, not quick and easy shortcuts. Any influencer promoting schemes that promise high returns with little risk or effort should be viewed with scepticism.
Never share personal financial information:
"Be extremely cautious about sharing personal financial information such as bank account numbers, national insurance numbers, or credit card information. Scammers often pose as influencers or financial advisers to trick individuals into revealing this information. Legitimate financial advisers will never ask for this information over social media.
Use social media as a learning tool, not a blueprint:
"Use the advice given by influencers as a starting point for your own research, not as a definitive guide. Everyone's financial situation is unique, and what works for one person may not work for another. Use social media to learn about different strategies, then tailor them to fit your own needs and goals. If you feel out of your depth consider seeking guidance or get your own financial advice.
"Social media can be a great tool for learning about personal finance and investment, but it should never replace professional financial advice. Always consult with a professional before making any major financial decisions"
