FCA Calls On Tech Firms To Act Against Illegal Forex Finfluencers

The UK Financial Conduct Authority (FCA) has urged lawmakers to create tougher rules for tech companies and social media marketers who promote illegal financial products. A lot of these adverts are linked to forex trading and are usually shared by so-called “finfluencers” on apps like TikTok and Instagram.

These “finfluencers” usually promise high profits and use luxury lifestyles to grab attention, but the FCA is worried that this advice is often misleading or false.

The Watchdog Has Charged Some Individuals, But No Convictions Have Occurred

During a recent meeting with the Treasury Select Committee, FCA officials condemned major tech firms for failing to tackle unlawful financial promotion. The FCA’s Director of Consumer Investments, Lucy Castledine and Director of Enforcement, Steve Smart, said tech platforms need to do more.

Castledine noted that some tech platforms take too long to remove harmful posts, even after being warned. She also pointed out that even if one account is taken down, the influencer usually comes back with a new one. The FCA currently has to request account removals one by one, but tech companies have the tools to stop this more quickly. Castledine added that these platforms need to act before more people get tricked.

According to the FCA, many finfluencers are helping to promote unapproved investment products. Even though it has charged some people, there have not been any convictions yet.

Currently, promoting illegal financial schemes can result in up to two years in prison, but the FCA believes this penalty is not severe enough and is calling for the maximum sentence to be increased to five years. Castledine told lawmakers that this kind of content is against the law and causes people to lose money.

Some Of The Accused In The Forex Case Denied Promoting Illegal Financial Products

This request follows a case where the FCA charged nine people for being part of an unauthorized forex scheme shared online. At Southwark Crown Court, some of the accused said they were not guilty of promoting unapproved financial products. One individual also denied offering unlawful counsel on contracts for difference (CFDs). A court hearing is set for 26 September 2024, with two trials planned for February and March 2027, subject to court availability.

The FCA recently shared it will hold a roundtable meeting in London this May with banking leaders. The goal is to talk about how strict rules may be holding back progress in artificial intelligence (AI).

The FCA and Bank of England carried out a survey, which showed that many firms see data protection laws and the Consumer Duty rules as major roadblocks to using AI in financial services.

According to the regulator, the survey results show that some companies are unsure about how to follow the rules while using AI. The meeting aims to understand these issues better and help companies find a balance between innovation and staying within the rules.