Social Media Meets Financial Regulation: Finfluencers Under Scrutiny in the EU and UK

Executive Summary

• What’s new: The EU Retail Investment Strategy package establishes new obligations for investment firms and insurance undertakings that engage finfluencers for marketing purposes, including written agreements, monitoring duties and content standards. While the UK has not introduced equivalent finfluencer-specific obligations and instead regulates finfluencers under its existing regime, the FCA has sharpened its focus on the issue by ramping up enforcement action against illegal financial promotions by finfluencers in 2026.
• Why it matters: Finfluencers have become an important marketing channel for providers of financial products and services, particularly for reaching younger retail investors. However, the use of finfluencers does not shift regulatory responsibility away from the providers of the respective services. Such providers remain responsible for ensuring that marketing activities carried out on their behalf are subject to appropriate management, oversight and compliance controls.
• What to do next: Investment firms and insurance undertakings should consider reviewing their existing finfluencer arrangements and assessing whether their governance frameworks are prepared for the forthcoming EU requirements and are compliant with the existing UK regime. This should include appropriate due diligence, contractual safeguards, approval and monitoring processes, and controls to ensure that investment-related communications remain fair, clear and not misleading.

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Background

Financial influencers (finfluencers) have become a pervasive presence across Instagram, TikTok, YouTube and other social media platforms. Their content ranges from educational materials and personal investment narratives to product promotions and affiliate marketing.

This combination of information, entertainment and promotion enables finfluencer content to reach audiences of millions, but the commercial interests underlying such content often remains unclear for social media users.

The impact of finfluencers is particularly pronounced among younger retail investors. Evidence from several European jurisdictions, including the United Kingdom, shows that social media and finfluencers are among the main sources of financial information for younger audiences, shaping investment decisions and often being viewed as reliable alternatives to professional advice.¹

Financial regulators have identified a number of related risks, including:

• An overly simplified presentation of complex financial products.
• Inadequate disclosure of conflicts of interest.
• The risk that retail investors may not be able to distinguish between promotional content and independent financial information.

Additional concerns relate to the risk of fraud and scams targeting retail investors, including through:

• The promotion of fraudulent investment products and services.
• Misleading investment opportunities.
• Referrals to unlicensed or unauthorized platforms.

Furthermore, financial regulators have raised concerns that social media, due to the rapid spread of content, personalized formats and the use of celebrities, could encourage short-term or emotionally driven investment decisions based on incomplete or misleading information. Consequently, finfluencer activity has attracted increasing regulatory scrutiny.

Against this backdrop, the following overview maps the current developments in the European Union and the UK, and examines the evolving expectations for market participants engaging with finfluencers or using digital channels for the marketing of financial products and services.

European Union

Retail Investment Strategy: Increasing Responsibility for Market Participants Engaging Finfluencers

Rather than establishing an additional licensing regime specifically for finfluencers, the EU Retail Investment Strategy package (RIS) would clarify that investment firms remain responsible for marketing communications carried out on their behalf through third parties, including finfluencers. As an omnibus directive, RIS amends various existing directives, including Directive (EU) 2014/65 (MiFID II).

Building on this allocation of responsibility, the proposed amendments to MiFID II introduce, for the first time, an explicit definition of the term “finfluencer.” According to this definition, a finfluencer is:

Any natural or legal person with the capacity to influence the behaviour, opinion or investment decisions of retail clients or potential retail clients due to exposure, position or relationship with the audience and who engages in marketing communications or marketing practices on behalf of an investment firm.

The proposed definition of “marketing communication” is similarly broad and technology-neutral. It covers any form or medium of information that directly or indirectly promotes financial instruments or the use of investment or ancillary services and is made by an investment firm or a third party in exchange for fees, commissions or other monetary or nonmonetary benefits.

Financial education activities that do not directly or indirectly promote specific financial instruments, categories of instruments or services remain outside the scope.

With that definitional framework in place, investment firms would be required under a new Article 24c MiFID II to comply with the following requirements:

• Identification and content standards: Marketing communications must be identifiable as such, name the responsible investment firm and be fair, clear and not misleading. There must be a balanced presentation of benefits, risks and key characteristics as well as be appropriate in terms of content and distribution channels for the target market.
• Written agreements with finfluencers: Investment firms must enter into written agreements defining the scope and nature of finfluencer activities undertaken on their behalf.
• Detailed records: Investment firms must maintain detailed records of finfluencer marketing activities, including relevant content, channels, dates and the identities of third parties.

To ensure compliance with these substantive obligations, a new Article 16 para. 3a MiFID II would require investment firms to implement appropriate governance arrangements overseeing their marketing communications and practices, thereby embedding the above standards into their broader organizational and control frameworks.

The proposed amendments to Directive (EU) 2016/97 (IDD) introduce a comparable definition of “finfluencer” and establish corresponding requirements for insurance undertakings and intermediaries in relation to insurance-based investment products under a new Article 26a IDD.

Following formal adoption by the European Parliament (expected in Q4 of 2026) and publication in the Official Journal of the European Union, the relevant RIS provisions are expected to become applicable after a 30-month transition period (i.e., by mid-2029).

European Commission’s Call for Advice to ESMA

On 24 August 2026, the European Commission issued a formal Call for Advice to ESMA requesting technical advice on implementing the RIS amendments to the relevant legal acts.

In relation to marketing communications, the Commission asks ESMA to advise on:

• The essential characteristics of financial instruments and investment or ancillary services that must be disclosed in all marketing communications to retail clients or potential retail clients, and criteria for making them prominent and readily accessible across media.
• Conditions ensuring that marketing communications and practices are fair, clear, not misleading, balanced as to benefits and risks, and appropriate to the target market, content and distribution channel.

ESMA must deliver its technical advice by 1 October 2027. The resulting Level 2 measures are expected to impose more granular requirements on investment firms — including when engaging finfluencers — governing what marketing communications must disclose and how they must be presented.

Existing Rules That Already Apply to Finfluencers

Irrespective of RIS, finfluencers are already subject to a range of existing EU legislation. Depending on the nature of their activity, applicable frameworks may include:

• The Market Abuse Regulation (MAR).
• The MiFID II regime.
• Regulation (EU) 2023/1114 (MiCA).

In particular, Article 20 MAR, together with Commission Delegated Regulation (EU) 2016/958, applies when public communication recommends or suggests an investment strategy relating to one or more financial instruments. This is a broad concept as confirmed by the warning published by ESMA: A video or post may qualify if it provides an idea about buying or selling a financial instrument, portfolio, or a financial instrument’s present or future value.

The use of informal language, an educational framing or the absence of technical analysis does not exclude the applicability of the regime.

Where MAR applies, recommendations must be presented objectively and the producer’s identity, the date and time of publication, sources, assumptions and conflicts of interest must be disclosed as applicable. Facts must be distinguished from interpretations, estimates and opinions. Professionals and persons presenting themselves as experts face additional requirements.

A public recommendation does not simultaneously qualify as investment advice under MiFID II. However, paid coaching, portfolio reviews and personalized model portfolios via direct messages may turn a public recommendation into investment advice within the meaning of MiFID II.

The decisive factor is whether a personal recommendation is offered to a specific client — either tailored to that client's circumstances or presented as suitable for them. Where that threshold is crossed, the service constitutes investment advice regardless of the medium through which it is delivered. Investment advice may only be provided by a person or firm duly authorized under MiFID II to do so.

If a finfluencer violates the applicable provisions of MAR or provides investment advice without a license granted by the national competent authority, severe penalties and sanctions may be imposed. These potential consequences underscore the importance of the supervisory expectations that follow.

MiCA establishes requirements relevant to finfluencers in the crypto market. Cryptoasset service providers must ensure that their marketing communications, including content published by finfluencers on their behalf, are clearly identifiable as advertising and are fair, clear and not misleading.

They must also warn clients of the risks associated with cryptoassets. Marketing communications relating to public offers of cryptoassets or admission to trading must be consistent with the applicable cryptoasset white paper and satisfy additional requirements.

Finfluencers may breach MiCA’s market manipulation rules themselves by sharing information, including rumors or third-party claims, that gives or is likely to give false or misleading signals about the supply, demand or price of cryptoassets if they knew or should have known that the information was false or misleading.

Supervisory Expectations for Finfluencers

The ESMA finfluencer factsheet, developed in collaboration with the national financial regulatory authorities, sets out EU-wide expectations regarding the activities of finfluencers:

• Content creators must clearly and transparently disclose any compensation, gifts, perks and their own holdings of the financial instruments they discuss.
• Facts must be distinguished from opinions, and risks should be presented fairly and in a balanced manner, rather than downplayed or omitted.
• Content that creates a false sense of urgency or exploits the fear of missing out should be avoided entirely.
• General disclaimers such as “This is not investment advice” do not override the substantive nature of the communication and cannot serve as a shield if the content effectively amounts to an investment recommendation or investment advice.

United Kingdom

The Financial Promotion Restriction: A Technology-Neutral Framework

Unlike the EU’s RIS, the UK has not introduced finfluencer-specific rules; instead, it applies its existing, technology-neutral framework to influencer activity.

Finfluencer activity is generally governed by the financial promotion restriction set out in Section 21 of the Financial Services and Markets Act 2000 (FSMA), with specific guidance on financial promotions in social media outlined in FG24/1. In line with this guidance, no person may, in the course of business, promote a financial product or service unless the promotion is made or approved by a firm authorised by the Financial Conduct Authority, or a specific exemption under the Financial Promotion Order 2005 (FPO) applies.

Since October 2023, qualifying cryptoassets² have been included within the scope of the FPO rules, so the financial promotion restriction also applies to the promotion of unregulated cryptoassets such as bitcoin.

The FCA has also categorised qualifying cryptoassets as restricted mass market investments (RMMIs), which means that marketing of cryptoassets to UK retail consumers must include additional risk warnings/summaries and cannot include incentives to invest. Direct offer financial promotions³ of qualifying cryptoassets to retail investors are also banned.

The FPO restriction applies even where content originates outside the UK, provided it is capable of reaching UK consumers. As some finfluencers have already found, breaching Section 21 is a criminal offence, carrying a penalty of up to two years’ imprisonment, an unlimited fine or both.

Responsibilities of Firms Engaging Finfluencers

Where firms use finfluencers to communicate financial promotions, they must take an active role in overseeing what they say and how they say it, with proper monitoring systems in place to catch noncompliant or illegal promotions.

This responsibility extends further than many firms may expect. The FCA may treat a firm as having caused a promotion to be made even if the firm did not write or control the content, for example where a finfluencer posts using the firm’s referral link. Firms should therefore consider ensuring they have robust sign-off procedures (Systems and Controls Sourcebook (SYSC) 3 and 4) and proper record-keeping (SYSC 9) in place.

Good practices under the FCA’s guidance include:

• Having a dedicated affiliates policy.
• Monitoring promotions on an ongoing basis.
• Ensuring affiliates only use content prepared by the firm.
• Cutting ties where noncompliance persists.

The Consumer Duty imposes a further obligation. Firms must satisfy themselves that finfluencer-led promotions genuinely help retail customers make good decisions. This standard applies equally to content the firm posts itself and to content communicated by a finfluencer on its behalf.

Firms should also consider the market abuse implications of finfluencer activity. Where a finfluencer makes investment recommendations, Article 20 of UK MAR requires objective presentation and disclosure of conflicts of interest, with enhanced obligations for those who do so regularly or hold themselves out as financial experts.

Firms engaging finfluencers whose content touches on specific financial instruments should consider ensuring that appropriate controls are in place to manage this risk.

For investment-related promotions, including those involving high-risk investments, firms face additional requirements under the Conduct of Business Sourcebook (COBS) 4.10. They must actively monitor approved promotions for as long as they remain live and obtain a confirmation every three months that there has been no material change.

Firms should also consider the possibility that a finfluencer’s activities could amount to a regulated activity under Section 19 FSMA, such as arranging deals or providing investment advice, which would be in breach of the general prohibition under the legislation to carry out these activities without a license.

Assessing Finfluencer Risk: The ‘In the Course of Business’ Test

When engaging a finfluencer, firms need to understand whether that individual’s activity is likely to fall within the scope of the financial promotion rules. The key test is whether the finfluencer’s posts are made “in the course of business.” The FCA’s view is that this requires some form of commercial interest. That interest does not need to be a direct payment; even an indirect commercial motive can be sufficient.

We would generally expect most firm partnerships/relationships with finfluencers to be in scope of the regime — a finfluencer is likely acting in the course of business where they are paid directly by a firm, promote services in the hope of landing a future deal, post content to boost views or followers that translates into platform revenue or higher fees for brand partnerships, or use affiliate links that generate a commission.

Firms should note that the absence of a direct payment does not take a finfluencer outside the regime.

Enforcement Action

The FCA has been actively pursuing illegal finfluencer activity, including through leading coordinated international enforcement. In April 2026, the FCA led a “week of action” involving 17 regulators worldwide, which combined enforcement activity, consumer awareness campaigns and educational programmes for finfluencers.

The week of action resulted in the FCA:

• Securing a guilty plea from a social media personality for illegal promotions and commenced separate criminal proceedings against two further individuals for similar offences.
• Sending four targeted warning letters.
• Issuing 34 warning alerts.
• Making 120 account takedown requests to social media platforms and identifying 1,267 illegal financial adverts within those accounts that had reached a minimum of 2.3 million UK accounts.

The UK campaign followed a June 2025 international week of action with eight other regulators.

Practical Implications

Investment firms and insurance undertakings that currently engage, or intend to engage, finfluencers should consider taking steps now to prepare for the evolving regulatory landscape in both the EU and the UK.

In the EU, with formal adoption of the RIS expected in Q4 2026 and a 30-month transition period thereafter, firms should consider using the intervening period to conduct a thorough gap analysis of their existing governance and compliance frameworks against the new requirements.

In the meantime, firms may want to ensure that any content produced by finfluencers on their behalf complies with requirements on objective presentation, disclosure of conflicts of interest, and the distinction between facts and opinions to comply with the already existing EU rules.

In the UK, the FCA’s intensifying enforcement position — underscored by criminal proceedings, coordinated international action and over 120 platform takedown requests in 2026 alone — signals that noncompliance carries serious consequences, including criminal liability. Firms should consider reviewing their sign-off procedures, ensuring proper record-keeping and implementing ongoing monitoring of finfluencer-led promotions, particularly those involving high-risk investments.

Given the cross-border nature of social media, firms operating in both jurisdictions should consider adopting a coordinated compliance approach, ensuring that governance frameworks address the requirements of both regimes and account for the fact that the UK financial promotion restriction applies to content capable of reaching UK consumers, irrespective of where it originates.

Research assistant Laura Wagner contributed to this article.

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1 A survey in Germany found that 60% of people ages 18 to 45 saw social media as a good alternative to professional advice. In another survey, 30% of respondents said they had followed finfluencers’ advice when investing in cryptoassets. About 40% didn't know that finfluencers are often paid for their recommendations. According to the Board of the International Organization of Securities Commissions’ (IOSCO’s) “Final Report on Finfluencers,” in France, social media, at 41%, is the number one information source for investments among 18- to 24-year-olds, followed by influencers, at 29%. In the UK, a survey showed that close to 14.4% of consumers had followed influencer financial advice.

2 Qualifying cryptoassets are defined as any cryptographically secured digital representation of value or contractual rights that: (a) can be transferred, stored or traded electronically, (b) uses technology supporting the recording or storage of data (which may include distributed ledger technology), and (c) is fungible and transferrable.

3 Direct offer financial promotions are defined in the FCA Handbook as a financial promotion that contains: (a) an offer by the firm or another person to enter into a controlled agreement with any person who responds to the communication, or (b) an invitation to any person who responds to the communication to make an offer to the firm or another person to enter into a controlled agreement, and in either case, which specifies the manner of response or includes a form by which a response may be made (for example, making an offer on a leaflet with a tear-off slip).

This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.