Influencer marketing might be one of the biggest growth sectors in the industry but the industry is facing its first major crisis after a raft of top names have been charged in relation to the promotion of unauthorised investments.
City watchdog the Financial Conduct Authority has charged the influencers – who have a total of 4.5 million followers on Instagram – over allegations they were paid to promote the scheme.
Those accused include The Only Way is Essex star Lauren Goodger, Love Island contestants Biggs Chris, Jamie Clayton, Rebecca Gormley and Eva Zapico, Towie’s Yazmin Oukhellou, and Geordie Shore’s Scott Timlin.
Back in 2022, the Advertising Standards Authority warned brands which jump into bed with “high-risk” influencers they faced legal action in a crackdown on serial offenders who failed to disclose when a post is an advertisement. And, in February 2023, the FCA warned it would come down hard on so-called “fin-fluencers” if it considered posts were misleading. However, this is the first prosecution brought by the regulator over alleged financial promotion breaches.
The FCA alleges that Emmanuel Nwanze and Holly Thompson ran an Instagram account under the handle @holly_fxtrends. The watchdog said it gave advice on buying and selling investments called contracts for difference, but without the required authorisation from the regulator to do so.
The watchdog said that contracts for difference were high-risk investments used to bet on the price of an asset, in this case foreign currencies and said 80% of customers lost money when investing in these products.
Nwanze allegedly ran the foreign exchange trading scheme and issued unauthorised financial promotions. The watchdog claims that he paid social media influencers to promote @holly_fxtrends to their Instagram followers.
Nwanze, Thompson and the influencers they paid have been charged with unauthorised communications of financial promotions.
Nwanze also faces one count of breaching a “general prohibition” under the Financial Services & Markets Act 2000, which prohibits people from carrying out regulated activities in the UK unless they are authorised to do so.
All will appear before Westminster Magistrates Court on June 13; if convicted, they could face up to two years in prison.
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