The UK’s financial watchdog warned Britons of the dangers of unregulated financial advice today amid fears social media influencers are peddling crypto and forex trading as a way out. a cost of living crisis.
The Financial Conduct Authority has intensified its warnings about crypto trading and promotional material in recent months as the cost of living soars, with regulator chief Nikhil Rathi constantly warning that investors should be prepared to lose “all their money” in speculative bets. on digital assets.
But some unregulated influencers on platforms like YouTube and TikTok have sought to pounce on the crisis to promote “trading academies” and suggest that crypto and forex trading can protect themselves from a squeeze.
In a promotional note seen by AM City, a trader with more than 100,000 Instagram followers who cites convicted criminal Jordan Belfort as an inspiration, said “with the cost of living crisis weighing on millions of cash-strapped Britons […] “People can negotiate their way out of a crisis – as long as they are sensitive to it.”
The trader in question claims to have gained a personal wealth of “nearly £2million”, after losing all of his father’s savings and then “trading wisely”, including “buying Bitcoin when it was cheap and selling the cryptocurrency when the price has peaked”. .
“I became successful in trading by learning the hard way, understanding that I could only save myself after I lost all that money,” he said.
The comments raised concerns about unregulated financial advice, with the Financial Conduct Authority saying yesterday AM City. that “people should always be wary of any promotion made by someone who is not authorized because it is very unlikely that you will have protection if things go wrong”.
“We have worked with the government to ensure that financial content is included in the online safety bill, which means that technology and social media companies will have to play their part to help protect consumers” , added an FCA spokesperson.
“If you’re struggling with the rising cost of living, help is available – contact your lender or MoneyHelper for assistance.”
Interactive Investor personal finance analyst Myron Jobson backed the watchdog’s comments and said trying to ‘get out of a slump’ was a ‘recipe for sleepless nights’ and could ‘leave you short’ in the midst of the rising cost of living”. .
“Always take investment advice on social media with a pinch of salt and always check the credentials of those giving the advice. It is important to use reputable sources when researching,” he added. .
The FCA and the UK’s advertising watchdog have sought to crack down on the promotion of crypto products this year, with the latter rolling out rules in March that stop companies stoking ‘fear of missing out’ on consumers. crypto prices, as well as implying in advertising that crypto products may be low risk.
“We are concerned that people are being tricked by advertisements into investing money they cannot afford to lose, without understanding the risks,” ASA chief executive Guy Parker said in March. .
The FCA has also tightened safeguards on crypto businesses more broadly by requiring companies to obtain full authorization to provide crypto services in the UK.