The Financial Sector Conduct Authority (FSCA) is set to crack down on financial influencer marketing, which sees influencers giving financial advice or promoting financial products.
Under the new rules, these influencers may be subjected to the same regulations as authorised financial advisors.
The news was revealed when the FSCA published the final version of its requirements for financial education initiatives. The rules aim to make sure that financial education is free from the promotion of specific financial products, as well as appropriate for its audience. There is a huge concern that influencers are passing off marketing as education, and offering advice that only qualified financial planners should be giving.
Changing consumer behaviour
In its 2024 regulatory report, the FSCA noted that an influx of social media influencers promoting financial products was changing consumer behaviour.
“This has inevitably led to the rise of finfluencers, referring to persons who post financial and investment-related content, and sometimes specifically promote financial products through social media,” the FSCA said in its 2024 Regulatory Actions report.
The FSCA said that at times, finfluencers have played a positive role in improving the financial literacy of the public and contributing to stock market use. However, there is still an overwhelming fear of misinformation and financial scams.
“It raises concern if the public is influenced in their financial decisions by social media and the advice of celebrities, rather than by recommendations of authorised financial advisers. The FSCA has seen evidence of finfluencers conveying misinformation and perpetuating scams through social media [which] presents a clear risk to the public,” they added.
In the same report, the FSCA said they would be closely watching the impact of influencers, and take action when needed to protect financial customers from exploitation.
The FSCA’s divisional executive of enforcement, Gerhard van Deventer, said that “the FSCA is considering the position of finfluencers and how they fit into our regulatory framework.”
“However, it should be noted that any person that provides financial advice with reference to a financial product as defined requires authorisation by the FSCA.”
“Providing such advice without authorisation is a contravention of the FAIS Act. Depending on the facts of each case, it may be that the activity of a finfluencer falls within the ambit of the prohibition,” he added.
The new regulations could see investigations of any complaints, leaving finfluencers in the hands of the FSCA.
