Research by TSB reveals that of the 31 percent of people who have acted on financial advice on social media platforms – over half (55%) lost money as a result.
Following the FCA’s ongoing focus on finfluencers, TSB surveyed almost 2,000 people who use social media, finding that nine in 10 (90%) had seen an investment opportunity on social media, and over two-fifths (43%) would consider investing as a result.
Over half trusted the content and said they had either acted on advice or planned to do so - with 25-34s the most likely to act or have acted (73%), compared to just over a quarter (27%) of over 55s.
However, over two-fifths (42%) said they did not know how to check the credibility or credentials of online content.
As a consequence, over half (55%) of those who acted on advice lost money as a result.
TSB’s internal customer data shows that over two-thirds (67%) of push payment investment fraud cases stem from social media platforms, which account for 71% percent of all investment fraud losses - at an average loss of £3,706 per case.
Almost two-fifths (36%) of these social media cases started on Facebook, followed by TikTok (17%), Telegram (17%), Instagram (14%) and WhatsApp (14%). However, Facebook and WhatsApp accounted for by far the biggest losses at 36 percent, and 35 percent respectively.
Surina Somal, director of everyday banking, TSB, says: “While there could be useful sources of financial advice on social media platforms; there are also pitfalls through incorrect information and unregulated investments that could derail your finances.
The Financial Conduct Authority is calling on politicians to draft legislation to crackdown on Big Tech and finfluencers who promote unauthorised financial schemes.
Speaking at a Treasury Select Committee inquiry into the role of finfluencers in financial markets in May, Steve Smart, director of enforcement and Lucy Catledine, director of consumer investments at the FCA, lamented the failure of Big Tech firms to keep track of bad actors promoting unsuitable investments on their social media site.
Castledine said many finfluencers continued to operate even after the FCA requestesd that a social media account be closed down by simply switching to another acount.
Under current laws, social media influencers found guilty of acting illegally face up to two years in prison.
The FCA believes that this is an insufficent deterrent and is calling for legislation to be amended to extend the maximum term to five years.