DIY investors on TikTok, YouTube and Instagram are being warned about cryptocurrencies and other high risk products.

The financial regulator has also said it may take action if social media sites continue to promote risky and sometimes fraudulent investments.

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In a speech, Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), said online search and social media companies "need to take greater responsibility" for connecting consumers with these investment offers.

He said too many of the "investment opportunities" that people are finding online "prove too good to be true".

Mr Rathi also reiterated an FCA warning on cryptocurrencies from January, saying: "If you invest, you should be prepared to lose it all".

The FCA regulates advertising for most financial services, including many types of investment products.

5 risks of crypto investments

THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.

  • Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements. 
  • Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
  • Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market. 
  • Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.  
  • Marketing materials: Firms may overstate the returns of products or understate the risks involved.

The rules state all financial promotions "must be clear, fair and not misleading".

The regulator’s website, which was updated this month, also makes clear that these rules apply “regardless of the media type”, adding that it could be a website, Facebook post or tweet.

Previously, online platforms were exempt from the financial promotions rules, but this was removed when the UK left the EU in January.

In his speech, Mr Rathi said: "We see no reason why different standards should apply to a search engine or social media compared to a newspaper.

"If these platforms choose to display, and profit from, adverts for risky – and in some cases fraudulent – investments, they should also comply with financial promotions rules."

The regulator is concerned that newer DIY investors are more likely to rely on YouTube or social media sites for research and finding investments.

Research by the FCA has found that a significant loss could have a fundamental lifestyle change on 59% of investors with less than three years' experience, compared to 38% of investors with more experience.

Social media platforms have boosted the number of young investors in recent years, with almost 10million Instagram posts currently featuring the hashtag #investing.

It comes as Twitter was last year accused of "profiting from posts promoting a Bitcoin scam" featuring a young UK millionaire.

How to spot crypto scams

CRYPTO scams are popping up all over the internet. We explain how to spot them.

  • Promises of a high or guaranteed return – Does the offer look realistic? Scammers often attract money by making fake promises.
  • Heavy marketing and promotional offers – If they are using marketing tricks to con customers you should beware.
  • Unamed or non-existent team members – Just like any business you should be easily able to find out who is running it.
  • Check the whitepaper – Every crypto firm should have a white paper. This should explain how it plans to grow and make money. If this doesn't make sense, then it could be because the founders are trying to confuse you.
  • Do your research – Check reviews online and Reddit threads to see what other people think.

People considering investing in Bitcoin or shares and stocks have also been warned over "risky" tips being shared on TikTok.

Investing in cryptocurrencies and currency trading is very complex, so it's important not to invest unless you understand it.

Nigel Green, chief executive and founder of deVere Group, told The Sun: "It can be possible to be successful in DIY investing, but for most people it is not recommended – it could be a costly accident waiting to happen.

"Going it alone can be monumentally risky for inexperienced investors as the complexities involved can tank their portfolios.

"Social media firms that promote a DIY approach to investing must also underscore the risks and potential pitfalls to be avoided."

He also urged keen investors to avoid stocks pumped by social media influencers.

Mr Green added: "There’s a major difference between investing and gambling."

The Sun has contacted TikTok, Facebook, Instagram, YouTube and Google for comment.

Facebook, which owns Instagram, declined to comment but added it will remove any fraudulent activity when it finds it.

The warning comes as Bitcoin had its biggest one-day drop in two months on Sunday.

It hit record highs last week, surging above $64,000 for the first time ever.

Meanwhile, an advert for a bitcoin exchange Coinfloor was banned last month for telling savers cryptocurrencies are a safe investment.

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