Financial regulators are sending a clear message to the social media economy: financial influence is now a global enforcement issue. Regulators across 17 jurisdictions have joined a coordinated action against illegal finfluencers, including authorities in Australia, Hong Kong, Singapore, Canada, Brazil, New Zealand, the UAE and the UK.
The ‘week of action’ campaign has combined enforcement action, consumer warnings and education for influencers, reflecting a growing concern that social media has become a fast-moving route for unlawful financial promotions.
A post made in one country can be viewed by investors in several others, including in markets where the creator may not be authorised to promote financial products or services. Regulators have said this makes supervision more difficult, particularly where content is reposted across platforms or directs users towards private groups, trading schemes or unauthorised services.
Steve Smart, executive director of enforcement and market oversight at the FCA, described the “collective push with international partners” as vital in helping to protect millions of consumers from harm.
He said: “We will only make real progress in the fight against financial crime if every part of the system plays its role – including social media firms.”
A coordinated response to a cross-border problem
The action taken by regulators varied by market, but the direction was consistent. Authorities are looking at the people creating the content, the firms that may benefit from it and the platforms that allow it to spread.
In the UK, the FCA said it made 120 account takedown requests to social media platforms during the week of action after identifying 1,267 illegal financial adverts, which reached at least 2.3 million UK accounts. It also issued 34 warning alerts against unauthorised firms or individuals and updated a further 14 warnings.
Australia’s ASIC issued warning notices to four finfluencers suspected of providing unlicensed financial advice or engaging in misleading or deceptive conduct. It has also started reviewing several Australian Financial Services licensees and their supervision of 15 finfluencers operating under their licences.
New Zealand’s Financial Markets Authority also contacted 14 finfluencers across social media platforms. The regulator said some misleading or harmful content had been removed, while some creators had reduced the scope of their services or stopped offering services to New Zealanders.
Samantha McGuire, manager regulatory services at NZ’s FMA, says consumers increasingly rely on social media for financial information, exposing them to potentially misleading promotions or fraudulent products and services.
“As financial promotions become more prevalent on social media, international collaboration is crucial in our ongoing efforts to strengthen consumer protection, safeguard individuals from misleading financial promotions and support a fair online environment. This joint action highlights our collective efforts to protect consumers,” she says.
Where financial content crosses the line
Not all financial content online is unlawful. A video explaining how compound interest works is different from a post pushing followers towards a trading platform, crypto scheme or investment service. Regulators are focused on content that promotes specific products, makes claims about returns, or sends users towards firms that may not be authorised to deal with them.
According to Caroline Black, consultant at Gherson Solicitors LLP, influencers need to be aware that straying into regulated territory is not a way to make easy money, “but a quick path to becoming embroiled in criminal legal proceedings”.
“Advice should be sought prior to producing such content,” Black added. “Social media platforms can also expect greater attention and increased regulation if they continue to fail to meet their own compliance standards.”
Charles Herbert, partner at law firm Spencer West LLP, also pointed to the distinction between legitimate financial content and unlawful promotion. While many financial social media creators operate legitimately, he said, some are promoting products or services illegally and without FCA authorisation through online videos and posts.
That creates a consumer protection issue as well as a regulatory one. Herbert noted that people who use unauthorised services may lose access to protections such as the Financial Ombudsman Service and the Financial Services Compensation Scheme.
He also said the FCA’s call for consumers to use its Firm Checker is important, though “perhaps optimistic”, given that many consumers may not know the tool exists or feel inclined to use it before acting on social media content.
For Herbert, this strengthens the case for social media platforms to do more at source. The FCA has said some platforms are not adhering to their own policies on financial promotions, and Herbert expects further regulatory action in this area.
Platforms under pressure
Jonathan Frost, Director of Global Advisory for EMEA at BioCatch, welcomed the regulatory action but ALSO argued that enforcement against individual creators only addresses part of the problem.
“The FCA’s enforcement action is welcome, but let’s be honest about what it is, symptom management,” Frost said. “Meanwhile the disease, the platforms themselves, continue to replicate such potentially illegal content unchecked.”
Frost said banks are already required to assess customer risk within seconds at the point of payment, and argued that platforms should be expected to screen advertisers and organic content more effectively where financial promotions are concerned.
For fintech firms, the issue is how creator partnerships are reviewed and controlled. A paid post, affiliate link or creator-led campaign may still fall within financial promotion rules, even when it appears in a short video or social media caption. Firms working with creators may need stronger checks around claims, risk warnings and the markets where content is being shown.