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‘No win, no fee’ - are clients being hoodwinked?
Dale Gibbons
In March 2024, the FCA published a clear warning to those advertising trading and investments on social media about the risks of doing so, making it clear that it will “will take action against those touting financial products illegally.” Just two months later, in May 2024, the regulator announced that it had commenced criminal proceedings against a number of individuals for advertising foreign trading schemes on their social media platforms.
The FCA has alleged that these individuals have, through Instagram accounts, provided unauthorised advice on entering into foreign exchange contracts for differences (“CfDs”) as well as issuing financial promotions - essentially adverts communicating financial services - without being authorised, both of which are criminal offences punishable by up to two years in prison, as well as involving the risk of the possible confiscation of profits under the Proceeds of Crime Act 2002.
Whilst historically the FCA may have relied upon consumer complaints to do identify these accounts, as part of its increasingly assertive and data led approach, it is highly likely to be proactively trawling across a range of different social media to try and identify accounts being used in this way and as new social media platforms come into existence and grow in popularity, the FCA is certainly likely to adapt its work to ensure that it is keeping up developments. However, the first thing that you may know about the FCA’s interest is on having your accounts suspended, being invited to an interview under caution or in some cases on arrest.
The FCA’s perimeter – i.e. what is and is not regulated – is broad and complex and can encompass a wide range of activities. Where a particular activity involves a product like foreign exchange or commodity CfDs, options or futures, it is very easy to fall within the FCA’s jurisdiction even without intending to do so. Similarly, financial promotions are tightly regulated and can only be communicated by FCA authorised persons or otherwise must be specifically approved by an FCA authorised firm. Even where you are acting entirely in good faith and creating what is intended to be purely educational content, it does not take much to inadvertently cross the line into regulated business and, by doing so, expose yourself to a possible criminal investigation and all the risk, stress and inconvenience such a process involves.
The FCA clearly sees “finfluencers”, particularly those who promote complex and high-risk products, as being a key driver of consumer harm and its focus is only likely to increase on this sector over the coming months and years. If you are ever in doubt as to what you are doing may engage the FCA or receive unwelcome contact from the regulator, it is always advisable to take professional advice. Kingsley Napley LLP has extensive experience of advising individuals under criminal investigation by the FCA for unauthorised business.
Further information
If you have any questions regarding this blog, please contact James Alleyne in our Criminal team.
About the author
James Alleyne is Legal Director in the firm’s Financial Services Group. He advises clients on the full spectrum of financial services and FCA-related matters, including on authorisation applications, perimeter and supervisory issues, enforcement investigations and cases before the Regulatory Decisions Committee and Upper Tribunal.
We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.
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