The Financial Planning Standards Board (FPSB) has submitted recommendations to an international retail market taskforce on how regulators around the world could address the potential adverse impact of ‘finfluencers’ and the rise of crypto assets.
FPSB, the standards-setting body for the global financial planning profession and owner of the international certified financial planning programme, wrote about the rise of complex financial products, technology innovation and social media with finfluencers.
Its submission was to the International Organisation of Securities Commissions Retail Market Conduct Task Force, in response to a consultation which looks to develop a regulatory toolkit for jurisdictions around the world to increase efforts to prevent retail investor harm.
“Financial fraud and scams are certainly not new, but the rapid emergence and evolution of crypto assets and other complex digital assets means the level of risk and exposure for retail investors is becoming heightened,” said FPSB head of stakeholder engagement Dante De Gori.
“Licensing and product regulation are struggling to keep up with this fast-changing landscape, leaving financial planners unsure of their regulatory obligations and leaving retail investors to go it alone, guided by marketing campaigns, often with harmful consequences.”
FPSB and its global network of non-profit certification and professional bodies certify more than 203,000 certified financial planner professionals around the world.
The consultation comes as retail market conduct issues are escalating on a global scale in the context of the pandemic, rapid technological developments, and an increasingly complex and changing retail trading landscape.
FPSB’s submission to IOSCO provided recommendations on issues including the impact of social media and ‘finfluencers’, and the need to regulate crypto assets and ensure that all who provide, or who are deemed to provide, financial advice are appropriately qualified to do so and held accountable for that advice, including finfluencers.
Chair of the CISI Financial Planning Forum Committee, Amyr Rocha Lima, said: “The Financial Conduct Authority (FCA) has recently used its supervisory powers to crack down on an investment app’s use of 'finfluencers' to promote the firm’s services.
“Finfluencers are social media celebrities devoted to sharing financial information on TikTok, Twitter, etc… and they’ve gained widespread media interest by posting about their stories of repaying personal debt and offering tips to help others with money worries.”
Rocha Lima said a lot of the banter among financial planners on social media around the FCA’s actions has a theme of “thank goodness, run them out of town”.
“However, aren’t finfluencers just the 'supply' for information who are actually filling a demand?,” he said.
“Indeed, if this isn’t the case, there would be no reason why the public would want to watch or listen.”
FPSB said members should establish a regulatory ‘sandbox’ for social media influencers and publish those operating in the sandbox on a public register of qualified fin-fluencers.