Existing regulation against scams will struggle to keep pace with bad actors in the AI age, the UK’s financial regulator has been warned as it prosecutes a host of ‘finfluencers’.
Several individuals will appear at Southwark Crown Court this week facing charges of illegally promoting dangerous investments on social media from the Financial Conduct Authority (FCA).
The prosecution is part of a crackdown of influencers irresponsibly peddling crypto, forex and other high-risk investments with no authorisation and limited expertise, a phenomenon described by the FCA as ‘finfluencers’.
The charges, which follow an announced globally coordinated effort against illegal financial promotions led by the FCA, are among the first of their kind.
“The legal consequences for high-profile individuals will likely illustrate to others that unregulated adverts on social media carry significant penalties, hopefully reducing the willingness of others to offer unregulated financial advice or promotion,” commented Angela Toner, financial services partner at RSM UK.
Despite the positive move to crack down on illegal digital financial promotions, Toner warned that social media will host an even greater volume of dangerous posts as criminals turn to AI technology.
“The criminals behind these investment scams can now use AI to generate huge amounts of realistic and convincing content – often using deepfakes of celebrities – and flood social media with it,” Toner said.
“Regulatory enforcement is racing to try to keep up with this influx, which often comes from outside the UK from jurisdictions where the FCA has no influence. It remains to be seen whether these prosecutions will do anything to hold back the deluge of illegal adverts.”