In light of this development the threat landscape for consumers has shifted, Rusu said. Fraudsters and scammers are benefitting from new technologies, she added during a speech at the CDO Exchange for Financial Services.
“Cryptocurrencies are a great example. Although crypto provides a potential area of benefit for firms in terms of improving efficiencies and driving down costs – it also provides a serious potential for exploitation and harm”, Rusu explained.
She highlighted that new kinds of consumers are being drawn to these markets for reasons that are not always conventional or rational.
A recent FCA survey indicated that more than three-quarters of people investing in high-risk products are motivated by competition with friends, family and acquaintances. More than half say that hype on social media and the news drove their decisions, according to results.
Influencers on Youtube, Instagram and TikTok are having a growing impact on younger investors in particular, who do not necessarily understand the risks they’re taking. The majority of people who’ve bought forex or crypto do not understand that these are unregulated and unprotected, according to Rusu. Therefore, cryptocurrencies continue to be high risk for consumers, highly volatile for markets, and highly likely to be used in financial crime, she added.
The FCA has been focusing its efforts to protect customers by warning consumers about the risks involved through traditional strategies, according to…