FCA bosses highlight risks of bad advice or fraud from some online influencers

The risks of bad advice or fraud from some online financial influencers have been highlighted by bosses from the City regulator.

Giving evidence to the Treasury Committee’s inquiry into financial influencers, or “finfluencers”, Lucy Castledine, director of consumer investments at the Financial Conduct Authority (FCA) said: “Over the course of 2024, we received 25,000 reports of unauthorised businesses.”

Asked if there was a risk that people providing genuine financial education could be scared off, she said: “We absolutely recognise that there is a place for people helping others navigate complex financial decisions.

“We recognise that financial literacy is relatively low, we know that people seek out help and support.

“The problem comes when that strays into recommending a particular product or straying into the regulated advice space.”

She added: “We want legitimate providers of financial services to be in this space, to crowd out those that we are having to take action on.”

Ms Castledine said: “Fundamentally, it’s a space that we need to see more people in, done in the right way.”

Steve Smart, joint executive director of enforcement and market oversight at the FCA, said: “There are a number of instances where what’s been promoted turns out to be a fraud or a scam, where people will lose a significant proportion, if not all, of their money.

“We had a recent case where we were able to stop an elderly gentleman who was in the process of sending across his last several thousand pounds to an individual, that was clearly a fraud.”

Mr Smart said the FCA has seen examples of bad advice being given as well as fraud.

He said technology has brought down the cost of fraud to criminals.

Mr Smart added: “Even the people who are perhaps not pushing a fraud, they are acting illegally because they are offering advice when they should be regulated and they’re not regulated.”

He later said: “We are not at all trying to demonise finfluencers in general.

“If people are provided with the right advice, that’s a good thing, it’s those that are breaking the law and providing harmful advice that we are focused on.”