The Financial Conduct Authority (FCA) has charged several prominent social media influencers, colloquially known as ‘finfluencers,’ including former star of “The Only Way is Essex” (TOWIE), Lauren Goodger, for promoting an unauthorised trading scheme to their followers.
The Allegations
The FCA alleges that Emmanuel Nwanze and Holly Thompson operated an Instagram account (@holly_fxtrends) that provided advice on buying and selling high-risk contracts for difference (CFDs) without proper authorisation. CFDs are complex financial instruments that carry a high risk of losing money rapidly due to leverage. Despite this, the account offered guidance to investors, which is a regulated activity requiring FCA authorisation.
To amplify their reach, Nwanze and Thompson enlisted the help of seven well-known social media influencers. These influencers promoted the @holly_fxtrends account to a combined audience of 4.5 million Instagram followers. Among the accused influencers are:
- Lauren Goodger: Former star of TOWIE
- Yazmin Oukhellou: Another TOWIE alumna
- Biggs Chris: Contestant from Love Island
- Jamie Clayton, Rebecca Gormley, and Eva Zapico: Other Love Island contestants
- Scott Timlin: Known from Geordie Shore
Each of these influencers faces a count of unauthorised communications of financial promotions.
Legal Consequences
Emmanuel Nwanze, in addition to facing a charge of unauthorised communications of financial promotions, has also been charged with running an unauthorised investment scheme. If convicted, all parties could face up to two years in prison.
The Role of Social Media in Financial Promotions
The charges underscore the increasing role of social media in financial marketing and the accompanying regulatory challenges. Influencers, with their vast and often highly engaged audiences, have become a go-to for companies looking to market products and services. However, the promotion of financial products is heavily regulated to protect consumers from potentially harmful advice and fraudulent schemes.
FCA’s Stance and Reminder to Financial Services Firms
In light of these charges, the FCA has reiterated its stance on the responsibilities of financial services firms in their promotional activities. In March, the FCA issued a reminder that firms must ensure that any influencers they work with comply with regulatory standards when communicating financial promotions to their followers. This includes ensuring that the influencers are authorised to provide such advice or promotions and that the information they share is clear, fair, and not misleading.
Conclusion
The charges against these reality TV stars and influencers highlight the critical need for stringent oversight in the promotion of financial products on social media. As the digital landscape continues to evolve, regulatory bodies like the FCA are working to ensure that consumer protection keeps pace with the innovative marketing strategies employed by companies and influencers alike.