The FCA has charged nine ‘finfluencers’ for accounts including running an unauthorised investment scheme and issuing unauthorised financial promotions.
The regulator alleges that Emmanuel Nwanze and Holly Thompson ran an Instagram account which gave advice on buying and selling contracts for difference without authorisation. Contracts for difference are short term deals which pay the difference between settlement price in the open and close of trades.
“The FCA has previously said that 80% of customers lose money when investing in CFDs because of the risks. They are often highly leveraged, which means they use debt to try and amplify returns, which can result in investors losing more than they invested,” the regulator stated.
“In the UK, the FCA has imposed restrictions on how CFDs and CFD-like options can be sold and marketed to retail customers. The FCA has been carrying out work to address consumer harm in the UK in this sector.”
See also: FCA charges trio with fraud over CFD scheme targeting pensions
The FCA has also alleged that Biggs Chris, Jamie Clayton, Lauren Goodger, Rebecca Gormley, Yazmin Oukhellou, Scott Timlin and Eva Zapico were paid by Nwanze to promote the account to followers. In total, the combined following of the accounts was 4.5 million.
The defendants will appear in court on 13 June.
The FCA published a finalised guidance for how financial promotions should be communicated on social media in March 2024, including labelling advertisements and following ASA regulations.
Michael Shaw, partner at legal firm Marks & Clerk, said: “The new guidance of the FCA, and the FCA’s action in challenging finfluencers who fail to comply with the guidance, are welcomed and it is hoped that the promotion of financial products and services on social media will be less likely to confuse or mislead the consumer moving forward.
“However, financial services companies will still need to exercise caution and diligence in order to ensure that their brands do not suffer any reputational damage as a result of the unauthorised or ill-informed posts of finfluencers.”
This story was written by our sister title Portfolio Adviser
