France has become the latest country to move towards regulating financial influencers, popularly known as finfluencers, by introducing a non-obligatory Responsible Influence Certificate.
France's Step Towards Regulating Finfluencers
Two top French regulators, the Autorité des Marchés Financiers (AMF) and the Autorité de Régulation Professionnelle de la Publicité (ARPP), jointly announced last week that they had set up a training module for finfluencers. The "Responsible Influence Certificate" has been in existence since 2021, and the ARPP has already issued about 1,000 such certificates to French influencers.
"Protecting retail investors is our top priority. If a publication by an influencer is paid for, it is crucial that the public is clearly informed," said the Chair of the AMF, Marie-Anne Barbat-Layani.
"Finance is a highly regulated sector, and investment communications must comply with the rules and be clear, accurate, non-misleading, and balanced. It appears that some influencers are unaware of this. This responsible influence certificate in financial advertising will help to professionalize this field and protect investors from financial products that are too complex or too risky."
Covering the Popular Retail Investment Products
The new module covers investment products like equities , bonds, ETFs, funds, derivatives and services (including investment advice, portfolio management, order reception, and transmission). It further added trading and investment recommendations, crypto-assets and digital asset service providers (DASPs), and a few other areas.
Through the module, the two authorities focused on products for which advertisements are prohibited, like binary options and contracts for differences (CFDs).
In the test for the certificate, finfluencers need to get at least 75 percent of their responses to the 25 multiple-choice questions correct. However, to obtain this certificate, French finfluencers need to obtain a 'general' certificate, which emphasizes governing commercial influence activities, among other things.
"The Certificate is useful for everyone," said Stéphane Martin, the General Manager of the ARPP. "By combining their respective areas of expertise, the work with the AMF to create a specific module for financial advertising, enabling influencers to understand the applicable provisions of positive law and the Recommendations of the ARPP Code, is part of a common and shared objective of protecting the public-retail investors."
Regulators vs Finfluencers
Despite the regulatory warnings, retail investors are very dependent on finfluencers. A survey by the Cypriot regulator showed that 31 percent of retail investors rely on finfluencers when making investment decisions. In France, this number reaches as high as 42 percent.
Apart from France, other countries are trying to control the unregulated rise of finfluencers. The regulators in the UK launched a massive campaign to educate the finfluencers. However, the Australian financial market watchdog took a harsh stance and went after one of the country's largest financial figures for offering unlicensed investment advice, hinting that finfluencers in the country need to be licensed.
