Social media giants must be more ‘proactiveʼ in removing harmful content, says FCA

Social media companies need to be more “proactive than reactive”, two leading regulators told the Treasury Committee on April 30. The pair were giving evidence to the lawmakersʼ inquiry into ‘finfluencersʼ, social media personalities who offer financial advice.

With 25,000 reports of harmful online financial promotions in 2024, the UK Financial Conduct Authority (FCA) has been urging tech giants to ban illicit accounts from their social media platforms for several years. While the firms respond to 100% of FCA requests, response times vary depending on the tech platform.

“I think they can do a lot more,” said Lucy Castledine, FCA director of consumer investments, adding that tech giant Meta can take up to six weeks to act on the regulator’s requests.

Castledine believes algorithms play an important role in fraudulent online financial promotions. By using keywords related to certain lifestyles — for example sports cars, yachts or designer items — videos can be targeted at audiences who did not search for them .

Fraudsters are also increasingly targeting “younger demographics” who are looking to “make money at their fingertips”, alongside the growing trend for scamming elderly victims in the UK, she added.

The two main types of harmful content include unauthorised entities touting brokerage and trading services, and finfluencers promoting ‘follow my trade’ content. Such content usually breaches the Financial Services and Markets Act 2000 (FSMA), particularly section 19 on general prohibition, section 21 on financial promotion and section 24 on purporting to be an FCA-authorised entity.

Enforcement action

In October last year the FCA hosted an action week on finfluencers, interviewed 19 entities and issued 40 alerts regarding fraudulent social media accounts. However, it found 60% of the accounts were based overseas, many in regions with weaker financial regulations.

To date, the FCA has charged nine finfluencers, in relation to an unauthorised foreign exchange trading scheme they promoted on social media. The cases are scheduled for February and March 2027.

Steve Smart, joint executive director of enforcement and market oversight at the FCA, told the committee that without evidence of fraud, the maximum sentence for illicit financial promotions is currently two years. The FCA is looking to change it to five years, he added.

“We are not a volume fraud prosecutor. In the finfluencer space, I don’t think it’s something we can prosecute our way out [of],” Smart said. The UK regulator is working with industry self-regulator the Advertising Standards Authority (ASA) to understand the underlying mechanisms of social media platforms.

He highlighted that, given the cross-border nature of the issue, regulating finfluencer activity requires international collaboration, and he is seeking to develop relationships with other jurisdictions. As part of its five-year global financial crime strategy, the FCA is also “active” in efforts by the International Organization of Securities Commissions (IOSCO) to tackle investment fraud .

Online Safety Act

Under the UK Online Safety Act 2023, social media companies now have a duty to assess illegal content on their platforms.

They must conduct illegal content risk assessments by March 16, as stated in guidance from communications regulator Ofcom published in December 2024. Sections 10 and 27 also require social media companies to explain the impact of illegal content on younger audiences.

The FCA and Ofcom are collaborating on “data-sharing” initiatives to understand online behavioural developments in the UK. “We are working closely with Ofcom and very supportive of the Online Safety Act,” said Smart. He added that while the Act focuses on children and sexual abuse, it was a possibility that fraud could also become an ‘identified harmʼ.