She pointed out that there has been a spate of social media posts that have lured people into high-risk schemes.
Ms Hooper said: “The crackdown is particularly needed during the cost-of-living crisis as people are more likely to turn to alternative sources with the promise of high returns being tempting for cash-strapped individuals without their eyes open to the risks involved.”
She said the incoming Consumer Duty raises expectations of firms communicating financial promotions on social media higher than ever before.
However, the powers of the FCA only go so far and will not be enough to stop outright scammers, she said.
Ms Hooper said: “The importance of legislation to make social media platforms responsible for taking down scam ads in a timely manner via the Online Safety Bill is paramount. Stopping scam adverts when people’s cash is so stretched should be a priority for the government.”
Sarah Coles, head of personal finance, Hargreaves Lansdown, pointed out that among the guidance is a reminder that some social media promotions can actually constitute a criminal offence.
She said: “The Wild West of social media finfluencers has received a warning shot from the FCA. It’s not so much that there’s a new sheriff in town, it’s the same old sheriff, but they’ve laced their boots up and left the comfort of their office.”
She pointed out that many finfluencers are focused on newer business models like buy-now-pay-later and cryptoassets and often target young people, who have faith in influencers. The FCA has said that 58% of the under 40s who’ve invested in high-risk products like cryptocurrency were influenced by social media hype.
Ms Coles said: “In a world where would-be crypto-currency investors have received tips from Kim Kardashian, and memes promoting Buy-Now-Pay-Later schemes, it has seemed as though anything goes. The FCA says it has seen a growing number of ads falling short of existing guidance, so this is an effort to clarify the rules, and then start taking people to task.”
She said the clampdown on bad actors is “vital”, in order to help people save and invest with confidence.
“However, for responsible businesses doing the right thing, the challenge will be to implement rules that provide the right balance between offering the best information to help people make informed decisions, and offering it in a format that they will actually want to read.”
