Charging finfluencers does not solve the issue of advice on social media

Speaking to FT Adviser, Toner discussed what could be done to begin cracking down on individuals promoting products without being qualified or regulated on platforms like TikTok and Instagram.

She said: “The challenges we face are threefold when we are looking at this area.

"You firstly have the regulated firms who are using influencers on social media and they have to be regulated and comply. You then have unauthorised individuals who may well be promoting real schemes, but without the appropriate warnings or understanding. 

“Then thirdly you've got just fraudulent schemes and scams. And we need to address all of those areas and the building blocks are slowly being put in place now to do that.” 

Toner said the FCA charging individuals promoting financial products on social media was a “good thing” and helped to spread awareness and act as a deterrent. 

Whether a person is promoting a financial product or the latest fake tan, a lot of the younger generation will take it as the truth

“The lack of understanding from these influencers is one of the things that needs to be tackled in terms of what they're actually talking about. Your average person isn't going to know what the Financial Services and Markets Act is. That's for professionals and authorised individuals to understand. 

“So on one of the building blocks you have the FCA working on this, the Financial Services and Markets Act has been updated, and they’ve published updated guidance.” 

The other building block to tackle the issue was the introduction of an online safety bill, according to Toner, which now includes rules that social media platforms must take down illegal financial promotions - but she said it will take time to work through.

The third building block was the introduction of rules by the payment systems regulator to help repay people who have been victims of scams and fraud.

Toner said: “This then brings in all the banks and the payment service providers who need to work in collaboration once again, to get their systems and policies in line to comply with these rules. 

“These rules also then push more of an onus on these companies to be shouting about this on social media themselves, talking about payment scams, raising awareness of being careful of authorised and unsolicited investment opportunities.”

Having all parts of the industry tackling the issue from different angles but with the same goal in mind will get to the heart of the issue, according to Toner.

She said: “Surveys have shown that 18 to 34-year-olds would or have responded to an unprompted investment ad on social media. Whether a person is promoting a financial product or the latest fake tan, a lot of the younger generation will take it as the truth. So we have to keep banging the drum.” 

Firms should use social media 

Toner believed regulated firms had a part to play to help spread awareness and financial education by using influencers, who do comply with regulations, but understood for some advisers running smaller firms it can be difficult to utilise.

She said: “Large firms have big marketing departments who can take care of the social media side of things and make sure the content being put out complies with regulations and has all the appropriate messaging and warnings.

“If you are a smaller firm who doesn’t have a dedicated team for this, social media may seem like one more thing you need to think about in terms of being a regulated business and the host of things that come with that.

"A lot of firms also have an ageing adviser base, who may not feel particularly comfortable with social media themselves. They probably know how to use it but wouldn't know where to start when it comes to posting targeted content.

“But social media is the way forward, it’s not going to go away.” 

alina.khan@ft.com