‘Fin-influencers’ face scrutiny over financial advice

A probe by the Financial Sector Conduct Authority (FSCA), aimed at clamping down on the rise in unregulated “influencers”, has drawn support and criticism.

Experts are conceding that there is a need for consumer education to be ramped up in South Africa in the fight against questionable financial advice on social media platforms.

In a warning to “financial influencers”, FSCA commissioner Unathi Kamlana posted on X: “The Financial Sector Conduct Authority is confronting the rise of unregulated financial influencers or ‘fininfluencers’, who offer advice on social media platforms.

Warning to ‘fin-influencers’

“The FSCA is investigating whether these influencers are operating without proper authorisation – highlighting the risks of seeking financial guidance online.

“The trend reflects a growing reliance on social media for investment advice, often from voices lacking the credentials of qualified financial planners.

“With sophisticated scams on the rise, the FSCA’s actions serve as a crucial reminder: while social media can be informative, it’s vital to prioritise expert advice over flashy content when making financial decisions.”

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Communications and branding expert Sarah Britten said consumer education was “key in empowering people to make more informed decisions”.

“It is important to be sceptical when there are promises of great returns,” she said.

“While you can pay attention to a random person who offers investment advice, never make the mistake of giving them your money.”

Important to distinguish between scams and financial influencers

She said it was important to “distinguish between scams and financial influencers”.

“Some financial influencers might be scammers, but many are not. However, some of them are unqualified to offer advice in the conventional sense,” she said.

Britten, who used to run marketing for a crypto exchange, said scams were “a major problem, particularly on Facebook”.

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“We also worked with credible influencers and valued their role in conversations with the public.

“I do not think there is anything wrong with people sharing advice on social media, as long as they are honest about their qualifications and expertise.

“The fact is that there are such low levels of trust in the mainstream or official qualifications, leading to people still going to look to random people with X accounts or YouTube channels.

Low levels of trust in mainstream or official qualifications

“If you look at some of the responses to that post, you’ll see claims that the authorities are trying to hide something,” she added.

One post read: “Big brother is watching over who enlightens everyone.”

“It’s because they are sharing the info they don’t want us to know,” said another.

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Refiloe Mokoena posted: “We are tired of free unsolicited financial advice and products from influencers.”

Influencer Lesetja Magongwa said he “always give financial advice on social media”.

“But I make it clear that I got it from Google – take it at your own risk. If you lose money, sue Google,” said Magongwa.

The National Consumer Commission (NCC), whose primary role is to protect the interests of consumers and ensuring redress, urged the public to take advice from regulated bodies.

Take advice for regulated bodies – NCC

In supporting the FSCA stance on influencers, NCC spokesperson Phetho Ntaba said the move would ensure that people received advice from “regulated bodies or persons – eliminating a rise in financial scams”.

“A lot of consumers have been losing their hard-earned cash through scams or pyramid schemes,” said Ntaba.

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“In the long run, questionable investments leave consumers in a compromised situation.

“We fully support the FSCA and call on SA consumers to check and understand who you are dealing with. If a person is not registered or authorised to give financial advice, walk away and look for people who are authorised.”