Charging ‘finfluencers’ does not address the heart of the issue when it comes to tackling unregulated financial advice on social media, according to Angela Toner, corporate finance partner at RSM UK.
Speaking to FT Adviser, Toner discussed what could be done to begin cracking down on individuals promoting products without being qualified or regulated on platforms like TikTok and Instagram.
She said: “The challenges we face are threefold when we are looking at this area.
"You firstly have the regulated firms who are using influencers on social media and they have to be regulated and comply. You then have unauthorised individuals who may well be promoting real schemes, but without the appropriate warnings or understanding.
“Then thirdly you've got just fraudulent schemes and scams. And we need to address all of those areas and the building blocks are slowly being put in place now to do that.”
Toner said the FCA charging individuals promoting financial products on social media was a “good thing” and helped to spread awareness and act as a deterrent.
“The lack of understanding from these influencers is one of the things that needs to be tackled in terms of what they're actually talking about. Your average person isn't going to know what the Financial Services and Markets Act is. That's for professionals and authorised individuals to understand.
“So on one of the building blocks you have the FCA working on this, the Financial Services and Markets Act has been updated, and they’ve published updated guidance.”
The other building block to tackle the issue was the introduction of an online safety bill, according to Toner, which now includes rules that social media platforms must take down illegal financial promotions - but she said it will take time to work through.
The third building block was the introduction of rules by the payment systems regulator to help repay people who have been victims of scams and fraud.
Toner said: “This then brings in all the banks and the payment service providers who need to work in collaboration once again, to get their systems and policies in line to comply with these rules.
“These rules also then push more of an onus on these companies to be shouting about this on social media themselves, talking about payment scams, raising awareness of being careful of authorised and unsolicited investment opportunities.”
Having all parts of the industry tackling the issue from different angles but with the same goal in mind will get to the heart of the issue, according to Toner.
She said: “Surveys have shown that 18 to 34-year-olds would or have responded to an unprompted investment ad on social media. Whether a person is promoting a financial product or the latest fake tan, a lot of the younger generation will take it as the truth. So we have to keep banging the drum.”
