UK: Finfluencers beware - The FCA is closing in

The FCA alleges that, between 19 May 2018 and 13 April 2021, Emmanuel Nwanze and Holly Thompson used an Instagram account to provide advice on buying and selling contracts for difference (CFDs) when they were not authorised to do so.  CFDs are a high-risk investment product used to bet on the price of an asset, in this case the price of foreign currencies. They are often highly leveraged, which means they use debt to try and amplify returns, which can result in investors losing more than they invested. The FCA has previously said that around 80% of customers lose money when investing in CFDs, and it has been carrying out work to address consumer harm in the UK in this sector.  

The FCA further alleges that Mr Nwanze paid seven “finfluencers” to promote the Instagram account to their combined following of 4.5 million people.  Amongst the seven are celebrities from Love Island, The Only Way Is Essex and Geordie Shore. 

“Finfluencers” are influencers who use social media and other online platforms to share or promote financial advice, tips, and related content with their audiences.  Promoting a financial product without approval from an FCA-authorised person with the right permissions may amount to a criminal offence.

Mr Nwanze faces one count of breaching the General Prohibition under section 19 of the Financial Services and Markets Act 2000 (FSMA), and one count of unauthorised communications of financial promotions under section 21 of FSMA.  The seven “finfluencers” each face one count of unauthorised communications of financial promotions under section 21 of FSMA. 

Breaching the General Prohibition is an offence under sections 19 and 23 of FSMA punishable upon conviction by a fine and/or up to two years’ imprisonment.  Communicating unauthorised financial promotions is an offence under sections 21 and 25 of FSMA punishable upon conviction by a fine and/or up to two years’ imprisonment.  

All the defendants have appeared before Westminster Magistrates' Court to indicate their pleas.  Six, including Mr Nwanze and Ms Thompson, have pleaded not guilty, and three did not indicate pleas. A plea and trial preparation hearing has been fixed for 11 July 2024.

In March 2024, the FCA published Finalised Guidance on financial promotions on social media to clarify its expectations for when firms and influencers use social media to communicate financial promotions, and to address emerging consumer harm arising from use of social media.  Amongst other things, the Guidance helps to clarify for non-authorised persons when communications fall within the FCA’s regulatory perimeter and how the FCA’s rules might apply to their activities. You can read our previous article on the FCA Guidance here.

Given the high-profile nature and celebrity status of some of the defendants, in particular in the world of social media, the FCA action is particularly strategic in terms of raising the profile of its own rules and sending out a strong deterrent message to other would-be “finfluencers” who do not have the necessary approvals.

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Authored by Daniela Vella and Claire Lipworth.