Directors at the Financial Conduct Authority (FCA) have called for tougher penalties for finfluencers who promote misleading financial advice on social media.
During a Treasury Committee session on the role of finfluencers in financial markets, Steve Smart, director of enforcement at the FCA, and Lucy Castledine, director of consumer investments, highlighted the current legal penalties.
They noted that social media influencers found guilty of illegally promoting financial investment products to their followers can face up to two years in prison.
However, they stated the FCA views this penalty as an insufficient deterrent and is calling for legislation to be amended to extend the maximum term 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.”
The directors also criticised social media platforms for not monitoring bad actors promoting unsuitable investments. Castledine specifically pointed out that many influencers evade FCA requests to close their accounts by simply switching to new ones.
Since these platforms have the technology to detect such behaviour, Castledine urged them to act proactively, warning that without this, the regulator would be stuck in a “whack-a-mole” situation.