The Financial Conduct Authority (FCA) has formally questioned 20 ‘finfluencers’ as part of its crackdown on the illegal promotion of financial services online.

Though the FCA did not name those questioned under caution, the financial watchdog did say that the interviews took place voluntarily, using the FCA’s criminal powers.

If criminal action is pursued, the finfluencers – online personalities using social media platforms to tout financial products and services – could face fines, or even up to two years in prison.

At the same time, the FCA also revealed it has issued another 38 warnings about social media accounts run by finfluencers that may be promoting illegal financial services.

The regulator is currently targeting those unlawfully offering advice on high-risk forex and contracts for difference (CFD) trading, a type of investment product that involves speculating on the value of assets, specifically foreign currencies.

However, the FCA has said it is growing increasingly concerned over the rise of finflueners advising in other areas, such as credit lending and debt solutions. 

According to the FCA, nearly two-thirds (62%) of 18 to 29-year-olds follow social-media influencers, of which, 74% reported trusting the advice of those online, and a further nine in ten then encouraged to change their financial behaviour because of them.

“Finfluencers are trusted by the people who follow them, often young and potentially vulnerable people attracted to the lifestyle they flaunt,” said Steve Smart, joint executive director of enforcement and market oversight at the FCA.

“Finfluencers need to check the products they promote to ensure they are not breaking the law and putting their followers’ livelihoods and life savings at risk.”

This latest warning follows a long campaign by the FCA to clamp down on social media personalities touting financial products, which the regulator says has become a hook for financial firms to lure younger customers, despite the fact that such endorsements are often misleading.

With so many influencers popping up across a host of social media platforms, the FCA has taken a two-pronged approach to tackling the issue. 

Firstly, taking preventative measures, the financial regulator has issued guidance for financial promotions on social media, and has teamed up with its sister organisation, the Advertising Standards Authority, creating material designed to help influencers when they are approached with the opportunity to promote a financial product.

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However, the watchdog is also fiercely pursuing criminal charges when it deems necessary. This year, it saw former Love Island and Towie stars taken to court on charges of promoting unauthorised investment schemes, though the celebrities pleaded not guilty. 

Rocio Concha, director of policy and advocacy at Which?, said: “Social media influencers can build up a huge fanbase of millions of people who value their statements and advice and may choose to act on them – and this could prove very costly if people are encouraged to make unnecessarily risky decisions.

“The FCA is right to remind finfluencers of their legal responsibilities. The regulator should not hesitate to take action against any found to be breaking the rules, as this would send a strong message that social media influencers may be able to reap large rewards, but they will also be held responsible for their posts.”