Finfluencers update: Reality TV stars face FCA charges

The FCA has charged 9 individuals for allegedly promoting or advising on contracts for difference ("CFDs"), a financial product where investors bet on the price of assets, via their social media accounts. The defendants include several former Love Island TV stars including: Biggs Chris, Jamie Clayton, Rebecca Gormley and Eva Zapico, as well as The Only Way is Essex star Lauren Goodger

The FCA has had the issue of 'finfluencers' (social media personalities who are discussing, promoting, or advising on financial products) on their radar for some time.  A prophetic RPC blog on the topic of finfluencers, which you can read here, discussed the recently published guidance on this area and flagged that, increasingly, people are seeking financial advice through alternative means such as social media websites.  This leaves investors open to a significant risk of losses, as this type of advice (which is often unauthorized) typically promotes risky products that promise huge returns in short periods. 

It is no surprise then that the FCA has started taking action against finfluencers.  The nine defendants face various charges under the Financial Services and Markets Act 2000 (FSMA).  Emmanuel Nwanze and Holly Thompson are alleged to have used their Instagram accounts to provide advice on buying and selling CFDs, and the FCA alleges Mr Nwanze paid the seven other defendants to promote Ms Thompson's Instagram account to their millions of followers. 

Whilst the paradise setting of Love Island provides contestants some practice in confinement, restricting their movements and leaving them unable to contact the outside world for 8 weeks, it is perhaps a more luxurious setting than the maximum 2 years of confinement that charges under s21 of FSMA can attract.

This is unlikely to be the end of this type of action from the FCA.  Social media driven investments are already in the mainstream.  The highest profile example to date saw stock in the bricks and mortar videogames retailer GameStop become the subject of a social media driven short squeeze in 2021 and resulted in a 2023 Hollywood film (Dumb Money, in case you want to look it up).  Since then, investing in increasingly risky products has become an internet sensation, with people trying to find the next 'meme stock' or scheme to cash in on.  Whilst some social media influencers are careful to tip toe around anything that can be considered advice or promotion, others are less cautious, perhaps unaware of the risks of telling their followers how they can strike gold.  Charges of this type are therefore no surprise, and with the FCA hot on the topic, it is likely that more will follow as social media users seek to leverage their influence with such promotions. More broadly, it serves as a reminder on compliant marketing of financial products.

The defendants are set to appear before Westminster Magistrates Court on 13 June 2024, and the FCA press release summarising their allegations can be found here.