Influencers are to be signed up by the City regulator in a campaign to warn people about the pitfalls of high-risk investments.
Some celebrities have been chastised for their role in promoting trading apps, which have proven popular among young people interested in investing.
The Financial Conduct Authority (FCA) intends to reach out to these risk-takers through a £11 million awareness campaign.
It is part of a larger strategy to ensure that investors are treated fairly.
“Never before have investors had so much leeway. Technology has democratised the market, new products have become available, and people now have greater access to their life savings than they did previously “said Sarah Pritchard, FCA’s executive director of markets.
“However, that freedom comes with a price. We want to give consumers more confidence in investing and to assist them in doing so safely while understanding the level of risk.”
In the strategy, the FCA has repeated its warning that some people have invested money for the first time during the pandemic in products which have unsuitably high risks for their financial circumstances.
It has warned they are getting involved in cryptocurrencies and foreign exchange owing to the thrill of investing, rather than for long-term savings goals.
In addition, there has been concern that some celebrities have been endorsing certain products without disclosing their own financial gain.
An Instagram post by TV star Lauren Goodger was banned in August because she did not clearly label it as an advertisement.
According to a survey conducted by investment platform Interactive Investor, 45 percent of young investors aged 18 to 29 said their first investment was in cryptocurrency, with many funding this through a combination of credit cards, student loans, and other loans.
As a result, the FCA is preparing a campaign to assist people in making informed decisions.
“We intend to reach our audience through a variety of channels, including partnerships with influencers, social media, online videos, paid ads on Google, and more,” according to the strategy.
The FCA also notes that nearly 8.6 million people currently have more than £10,000 in cash investible assets.
In a significant boost for the investment industry, the regulator intends to reduce by one-fifth the number of consumers who could benefit from investment earnings but do not.
This could mean that 1.7 million people, each with more than £10,000 saved, switch from cash savings to investments.
“For many of these individuals, investing is a logical route, as they don’t need the safety of cash or immediate access to their money,” said Laura Suter of investment firm AJ Bell, “but it’s often a job on the to-do list that people don’t get around to.”
The FCA should have been more ambitious in its supervisory role, according to Liz Field of the Personal Investment Management and Financial Advice Association.