The UK’s financial regulator has told tech groups to do more “to protect consumers”, after a surge in misleading product promotions by social media influencers and bloggers led it to issue a record number of take-down orders.
The Financial Conduct Authority said on Friday that it had required companies to amend or remove 8,252 promotions in 2022 — 14 times more than the year before — and published over 1,800 alerts to prevent consumers losing money to scams.
Only groups authorised by the FCA can offer financial promotions in the UK.
Noting an increase in bloggers and influencers on sites such as Instagram, Facebook and YouTube promoting investment products to younger people, the watchdog said “more needs to be done by tech companies to protect consumers”.
The warning comes as concerns mount that the surge in living costs is pushing more people towards high-risk financial products, and follows a pledge from ministers to overhaul regulation of the cryptocurrency sector.
The watchdog warned that unauthorised “fin-fluencers” — influencers who publicise content on financial matters — also needed to think carefully before promoting products, and to be clear about their obligations when advertising through their social media channels to avoid breaking the law.
“In the most serious of cases, we have and will refer fin-influencers for criminal investigation”, it said, adding that it was concerned by a trend among bloggers to promote credit, especially to students, on behalf of unauthorised third parties.
The FCA has no powers to force sites to be taken down. Instead, it has to ask the platform hosting harmful content to remove it.
It said on Friday that, given the high number of illegal financial promotions, it expected all social media platforms to improve their ability to identify and remove them proactively.
In one case, the regulator found that a director of an authorised company had used a personal social media profile to promote the advice of unauthorised traders and other financial products.
Sarah Pritchard, FCA executive director for markets, said: “This year, we will continue to put the pressure on people using social media to illegally promote investments, which put people’s hard-earned money at risk.”
The FCA said it was concerned that the cost of living crisis would make more people susceptible to risky products. In one case, it forced an online retail broker with more than 1.1mn customers, mainly in their mid-20s to late 30s, to halt a marketing campaign.
“We had serious concerns that the firm’s financial promotions, which involved social media influencers, were targeting vulnerable consumers with significant debt,” the regulator said.
Cryptocurrency has also been a focus for the watchdog. It said it had sought the removal of the website of one unregistered exchange provider that appeared to be offering derivative digital asset products to consumers.
Digital asset service providers at present need to pass anti-money laundering reviews, and the FCA is consulting on introducing tougher measures for companies offering financial promotions.
It says the proposed checks will speed up the removal of harmful adverts by unregulated groups and individuals.
The UK government this week set out plans to bring regulation of the cryptocurrency industry in line with that of mainstream financial services.
Although the FCA does not regulate crypto, it is to be given oversight of most of the sector’s marketing.
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