Regulators in the United Kingdom have grown weary of the heightened misuse of social media to influence the rally towards illegal financial products. At the same time, the level of harm which it causes its followers has been on the crease.
Together against indiscriminate crypto advertising, the Financial Conduct Authority (FCA), the Advertising Standards Authority (ACA), and Love Island star Sharon Gaffka have teamed up to warn social media financial influencers.
These financial influencers, stylishly referred to as “finfluencers” and their agents have been instructed to desist from promoting ‘get rich quick’ schemes and other illegal financial vehicles or face legal enforcement actions. A large percentage of them leverage social media platforms like Instagram and Tik Tok to suggest a particular financial investment to their followers.
“We’ve seen more cases of influencers touting products that they shouldn’t be. They are often doing this without knowledge of the rules and without understanding of the harm they could cause their followers. We want to work with influencers so they keep on the right side of the law, as this will also help protect people from being shown scams or investments that are too risky,” Sarah Pritchard, FCA Executive Director, Markets said.
Finfluencers to Perform Due Diligence
In a bid to ensure that these finfluencers operate within the law, both regulatory entities made reference to cryptocurrencies as well as Non-fungible tokens (NFTs) in a seven-part checklist. Financial influencers are expected to go through this checlist to ensure that they are qualified to tout any financial products and services.
As part of the seven-part checklist, social media finfluencers are expected to explain to their followers the potential risk of purchasing or trading any financial product or service which they influence. Investors should be aware that they could lose their money from a possible investment. Therefore, due diligence should be conducted by any influencer before finally agreeing to take on any brand deal.
“Don’t suggest to your followers that cryptoassets would be an easy investment decision or create any sense of urgency or FOMO,” would be influencers were told.
Generally, the UK is working tirelessly to improve its crypto network with robust regulation and the government has already whisked out a proposal to that effect. This has been the case with other jurisdictions as well since the implosion of FTX exchange.
