Explainer – What can finfluencers do to protect the interests of consumers?

A finfluencer is someone on social media who shares advice or opinions about saving, investing, mortgages or debt, and whose content can influence how people manage their money.

Before promoting a financial product or service to their followers, finfluencers should bear in mind that consumers may trust their advice and make financial decisions based on what they say. This means consumers could potentially lose money if things go wrong. 

Therefore, finfluencers should verify their facts, be honest about their interests, and think carefully about the real impact on people's finances before they post.

Given the volume of financial frauds and scams, finfluencers should take particular care to check that any financial products, services or platforms they are promoting are legitimate and regulated, as required.  Finfluencers should avoid promoting anything they are unsure about, no matter how good it sounds.

Finfluencers should be clear about any payment or benefits they receive – this includes gifts or money. If a finfluencer has invested in the product they are promoting, or if they might benefit from others buying the product, they should say that. They should use words such as “Ad”, “Paid partnership”, or “Sponsored”, or use the platform’s integrated “ad” banner.

Some investments marketed by finfluencers - such as forex, or cryptocurrencies – can be extremely risky.  Finfluencers could be held legally responsible for the consequences of a misleading post. They should always explain the risks alongside the benefits.  

Telling people what to invest in – or not – can count as investment advice. If a finfluencer is not licensed or authorised to provide investment advice, they should not give personalised recommendations on what to buy, sell, or hold.  Disclaimers such as “This is not investment advice” will not protect a finfluencer if they are in reality giving investment advice.

The Market Abuse Regulation contains rules about making investment recommendations.  To stay on the right side of the law, finfluencers should make sure they:

• Understand what counts as an investment recommendation
• Double-check before they post to avoid breaking the rules by mistake
• Follow the regulations.

Finfluencers who fact-check, are transparent, promote legitimate financial products, and understand and follow the Market Abuse Regulation, can better ensure that the interests of consumers are protected.

See also: