Be wary who you take financial advice from as FCA cracks down on illegal ‘finfluencers’

If you’re thinking about getting financial advice, then you should be careful about who you get it from.  

The Financial Conduct Authority (FCA) is clamping down on those who may be giving illegal advice and has launched action against social media ‘finfluencers’.  

Let’s take a look at why getting financial advice from social media isn’t a good idea and what to look for instead. 

What are ‘finfluencers’?  

A play on the words ‘financial’ and ‘influencer’, ‘finfluencers’ are highly active social media personalities who talk about different money-related topics usually investing, saving, cryptocurrency and even ways to get rich quicky.  

They usually share their advice in quick, easy-to-digest videos. Their content is often engaging and some finfluencers do provide genuinely helpful tips. 

So what’s the problem? 

Finfluencers don’t need any financial qualifications and are not regulated to give financial advice.  

This means anyone can offer advice, which may sometimes be wrong or deliberately misleading. 

And it’s a good idea to be wary as finfluencers might not have your best interests at heart, Because they typically make money through sponsored posts and referral fees. They might be getting paid to push a product on you, rather than offering genuine advice. 

Why is the FCA investigating certain finfluencers?  

The FCA is worried that some finfluencers are promoting financial products without really understanding them or the risks involved.  

To address this, they have questioned 20 finfluencers who may be involved in illegal activity.  

The regulator has focused on those giving illegal advice about contracts for difference (CFD) trading. CFDs are investment products that involve guessing the value of assets, especially foreign currencies. 

But the FCA is also concerned about the rise of finfluencers advising in other areas, such as debt solutions and credit lending.  

Steve Smart, joint executive director of enforcement and market oversight at the FCA, warns finfluencers are trusted by their followers, often young and potentially vulnerable people “attracted to the lifestyle they flaunt.”  

“Finfluencers need to check the products they promote to ensure they are not breaking the law and putting their followers’ livelihoods and life savings at risk,” he said.  

Tips on avoiding fake influencers and bad advice  

With thousands of finfluencers online, it can be hard to identify the genuine personalities offering good advice from the fakes.  

But there are certain steps you can take to help protect yourself:  

Be aware of scams 

The number of scam ‘get rich quick’ schemes on social media has soared in recent years.  

In some cases, scammers posing as genuine finfluencers promote high-risk investments.  

Being aware of the scams going around can help you recognise fake investments from real ones.  

Do your research 

If you’re thinking about going to an influencer for financial advice, always do your homework.  

Find out what people have said about the influencer and if they have genuine followers.  

Always research the investment they are offering. Remember that no investment is 100% risk-free and if it sounds too good to be true, it probably is.  

Don’t assume the influencer is an expert  

Just because a person has millions of followers, it doesn’t mean they are qualified to give out financial advice. It’s worth checking what official qualifications they have.  

Consider regulated financial advice 

One of the best ways to make sure you only get trusted, reliable and unbiased financial advice is to use an adviser who is regulated by the FCA. They will offer you personalised advice based on your circumstances that allows you to make informed decisions.  

Our guide about getting financial advice is a great starting point. 

And if you need help getting your money back on track, we're here for you. You can access our free debt advice online 24/7 at a time and place to suit you.  

Or if you prefer to speak to someone on the phone, call us on 0161 518 8285. We're here 8am to 8pm during the week and between 10am and 4pm over the weekend. 

All advice is free and impartial. Some debt solutions are also free, some have a fee.