The UK Financial Conduct Authority (FCA) has asked lawmakers to introduce stricter rules for technology firms and social media influencers who promote unauthorised financial products.

Many of these promotions relate to forex trading schemes, which are often presented by self-described “finfluencers” on platforms such as Instagram and TikTok. These influencers typically claim high returns and use lifestyle content to attract followers, raising concerns about misleading or unverified financial advice.

FCA Officials Demand Faster Action on Finfluencers

During a recent Treasury Select Committee session, senior FCA officials criticised major technology companies for not doing enough to stop the spread of illegal financial content. Steve Smart, Director of Enforcement, and Lucy Castledine, Director of Consumer Investments, said current efforts by tech platforms are not sufficient.

Castledine said some companies are slow to act when the FCA flags harmful posts. “We can’t have that content popping up 12 hours later,” she said. She added that even when accounts are removed, influencers often return under new names. “At the moment we have to submit individual account takedowns. The Big Tech platforms have got the technology to identify this; they need to be proactive about it otherwise we will be in a continued whack-a-mole.”

You may find it interesting at FinanceMagnates.com: FCA Flags 38 Finfluencers amid Surge in Financial Scams Targeting Youth.

Pushes for Increased Sentences on Financial Crimes

The FCA also warned that finfluencers—social media figures who discuss financial topics—are frequently involved in promoting unauthorised investment products. Although the regulator has brought charges against some individuals, no convictions have been recorded so far.

Under current laws, promoting unauthorised financial schemes can lead to a prison term of up to two years. The FCA has said this is not a strong enough penalty to deter wrongdoing. It is urging Parliament to increase the maximum sentence to five years.

“Fundamentally this content is illegal,” Castledine told MPs. “It is driving people into parting with their money. It is very much a recurring theme we are seeing and it is a growing trend. We need people to sit up and take action.”

Trials Set for Forex Trading Scheme Defendants

The request follows legal action brought by the FCA against nine people linked to an alleged illegal forex trading scheme advertised online. At Southwark Crown Court, several defendants pleaded not guilty to charges of unauthorised financial promotions.

One person also denied giving unauthorised advice on contracts for difference (CFDs). A plea hearing is scheduled for 26 September 2024. Two trials are set to begin on 1 February and 15 March 2027, depending on court availability.

This article was written by Tareq Sikder at www.financemagnates.com.Retail FXRead More

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