A collection of 17 securities regulators from around the world — including three of Canada’s major regulators — took part in an effort to address a growing concern about unregulated finfluencers, and their potentially-damaging impact on investors.
The U.K.’s Financial Conduct Authority (FCA) led a so-called “week of action” against detrimental finfluencing activity, which included enforcement action targeting illegal content, educational initiatives, and demanding more action from social media platforms.
For instance, in the U.K., the regulator issued warnings to unauthorized financial promotions, published dozens of investor alerts against unregistered firms and individuals, and made 120 account removal requests to social media platforms involving more than 1,200 illegal ads.
The Australian Securities Securities and Investments Commission (ASIC) said it issued warning notices to four finfluencers suspected of providing unlicensed financial advice, and making misleading claims, such as guaranteeing returns. It also launched a review of several firms focusing on their supervision of finfluencers operating under the firms’ licences.
“The action is intended to disrupt unlawful finfluencer online promotion before consumers suffer financial harm,” the ASIC said.
In total, 17 agencies from around the world took part in the initiative — including the Ontario Securities Commission, British Columbia Securities Commission, and Québec’s Autorité des marchés financiers — along with regulators from parts of Asia, the Middle East, Europe and South America.
“This collective push with international partners is vital in helping to protect millions of consumers from harm. We will only make real progress in the fight against financial crime if every part of the system plays its role — including social media firms,” said Steve Smart, executive director of enforcement and market oversight at the FCA, in a release.
To that end, the FCA called on social media companies to take a more active role in combating illegal content and enforcing their own policies against illicit content.
The ASIC said its crackdown on finfluencers stems from a concern about the growing impact of social media on financial decision making. Recent research found that 63% of Gen Z investors in Australia report that they rely on social media for financial information, and more than half say they somewhat, or completely, trust financial information on social media (56%) and from finfluencers (52%).
“Unlawful finfluencer activity doesn’t respect borders, which is why regulators are taking strong action together,” said ASIC commissioner, Alan Kirkland, in a release.
“What people see online is shaped by algorithms designed to drive clicks and engagement, rather than promoting accurate information. This means consumers are more exposed to biased or misleading content.”