Partner Richard Cannon comments on the FCA’s crackdown on “finfluencers”

Partner Richard Cannon explores the news that the UK’s Financial Conduct Authority (FCA) has interviewed 20 “finfluencers” under caution, as the regulator launches targeted action against those illegally promoting financial services products online.

Richard’s comments were published in Law360, 24 October 2024, and can be found here.

“The primary function of the FCA is the protection of the public from rogue players in the marketplace. These cases are a true test of the FCA’s ability to police social media activity in its own neighbourhood. It’s one thing dealing with the regulated sector of office based financial service providers, however social media is a different beast entirely – and we are increasingly seeing that this is where the public are most at risk from unregulated advertising or promotional material.

“The FCA cannot change the style of this marketplace, but they must take robust action to make it abundantly clear that financial investments cannot be promoted in the same way as the latest fad food supplement.

“It’s a matter of education – and only by very loud prosecutions with sentences upon convictions will deterrents be created.

“Convictions will not be straightforward; the offence is highly technical and no doubt novel legal arguments will be raised on behalf of the defence.

“The nature of the conduct arguably lends itself more to celebrity endorsements than promotion of the investment scheme concerned. The fact that the alleged misconduct took place on social media should not present too many problems – arguably there is nothing that distinguishes this from TV advertising or even email promotions.

“There is always the potential for reputational knocks for law enforcement in high profile prosecutions – that is the price of doing business in the field. However, the FCA’s real intention is to send a loud and clear message to social media influencers that it is “watching” what they are doing, and that if that message is heard, the FCA has already achieved its objective, whether or not any convictions follow.”