Key Takeaways
- The Financial Conduct Authority announced a crackdown on “rogue” financial influencers.
- The regulator’s latest efforts to police social media reflect new duties under the U.K.’s Online Safety Act.
- The Online Safety Act grants the FCA new mechanisms to facilitate the reporting and removal of fraudulent content online.
Led by the U.K.’s Financial Conduct Authority (FCA), global financial regulators announced a major crackdown on “rogue” social media influencers who promote high-risk investments like crypto assets.
In the U.K., the crackdown has led to three arrests and more than 650 social media take-down requests as regulators embrace the country’s strict new online safety regulation.
FCA Leads Global “Finfluencer” Crackdown
In coordination with authorities in Australia, Canada, Hong Kong, Italy and the United Arab Emirates, the FCA said it targeted so-called “finfluencers” in a “week of action” that started June 2.
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The regulator has started criminal proceedings against the three arrested individuals and sent cease and desist letters to another seven.
“Our message to ‘finfluencers’ is loud and clear,” stated Steve Smart, joint executive director of enforcement and market oversight at the FCA. “They must act responsibly and only promote financial products where they are authorized to do so—or face the consequences,” the FCA stated.
While the FCA’s primary responsibility is to regulate banks and financial institutions, its latest efforts to police social media reflect new duties under the U.K.’s Online Safety Act.
Fraud and the Online Safety Act
Although the Online Safety Act primarily targets online service providers, it indirectly affects the FCA by establishing mechanisms that facilitate the reporting and removal of fraudulent content online.
“Whilst there has been a lot of coverage on protecting people from harmful behaviors and illegal materials online, the Online Safety Act’s wide remit also mandates the protection of people from fraud and financial offences,” noted Terry Green, Social Media partner at the law firm Katten Muchin Rosenman.
“This includes rogue financial promotions, especially in social media and messaging services,” he told CCN.
While the FCA targets a broad illegal financial promotions, the latest crackdown could have far-reaching consequences for crypto influencers.
Karl Foster, Financial Services Partner at Spencer West, observed that the FCA has made “the reduction in high-risk investment by those with a low tolerance of risk” a top priority. This includes taking a hard line against crypto promotions, he added.
The regulator’s warning list of unauthorized firms includes dozens of unregistered crypto exchanges and brokers.
In May, the FCA also added three prominent social media personalities under the new category of “crypto finfluencer” to the list.
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