Platforms such as Instagram, TikTok and YouTube appear to be the most popular, offering bite-sized and easily absorbable financial information. They hide the formality of the content behind humour, colourful graphics and even viral trends. Popular Finfluencers include Tori Dunlap (@herfirst100k), who focuses on the financial independence of women, and Humphrey Yang (@humphreytalks), best known for his straightforward breakdown of investments. The unfiltered content and ability to simplify topics such as stocks and shares, cryptocurrency and savings plans has become very popular with Millennials and Gen Z, many of whom would otherwise not have access to such content.
At a glance, it may seem that Finfluencers are positive role models for the younger generation, making financial advice more accessible and engaging. However, the Financial Conduct Authority (FCA) has raised concerns about the reliability of the information that is being provided.
The FCA has stated that Finfluencers lack the formal financial education it takes to distribute such knowledge, which can lead to misguided decisions by their followers. Unlike certified financial planners or registered investment advisers who must adhere to regulatory standards, Finfluencers are often self-taught. This raises questions about the credibility of the advice they provide. They are often known to promote high-risk investments, such as cryptocurrency, options trading or ‘meme stocks.’ While they may present possible high returns as an ‘easy’ way to gain wealth, many followers will not fully understand the volatility or potential for loss. In addition, Finfluencers lack the accountability that a registered professional regulated by a governing body would have. As their platform grows, they are likely to be approached to promote products such as trading platforms, creating the potential for a conflict of interest. These partnerships are not always disclosed clearly, leaving followers in the dark that the advice being given is actually a paid promotion.
While Finfluencers have helped to democratise financial education, viewers must exercise caution. Their role in fuelling interest in personal finance is undeniable, signalling a shift towards a more financially aware generation. However, the FCA is highly concerned about consumer protection. As previously noted, they are concerned that young impressionable followers will be vulnerable to content which glamorises high-risk trading strategies which can lead to the risk of huge financial loss. The FCA continues to monitor Finfluencers and, as they become more prominent, it is expected that regulatory scrutiny will intensify.
For example, in October 2024, the FCA interviewed 20 Finfluencers under caution and issued 38 warnings against unauthorised accounts. This follows action taken in May 2024, when nine charges were brought against individuals promoting unauthorised foreign exchange trading schemes. The FCA has growing concerns about the increasing influence of these Finfluencers, with 74% of their followers reporting trust in the advice provided and 90% stating they have been persuaded to change their financial behaviour.
To address these issues, the FCA is holding firms accountable by requiring all online financial promotions to be pre-approved by an FCA-authorised firm. Non-compliance is a criminal offence, and punishable by fines and, potentially, jail time. This measure aims to prevent Finfluencers and firms from exploiting vulnerable consumers by promoting risky financial behaviour without proper oversight. The FCA emphasises the importance of relying on credible sources for financial advice and highlights the consequences for Finfluencers who operate outside regulatory standards. These sanctions serve as a reminder to consumers to verify the legitimacy of financial advice found online.
For more information, please see the Finalised Guidance FG24/1 posted by the Financial Conduct Authority here.
This article was co-written by Hope Phillips, Trainee Solicitor.
