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With ‘finfluencers’ lurking, CySec announces financial literacy campaign

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CySec’s president Dr. Giorgos Theocharides said that rapid technological development, market uncertainty and the COVID-19 pandemic have significantly contributed to the increase in the use of the internet to make investments

The Cyprus Securities and Exchange Commission (CySec) is warning of manipulation attempts against young people from ‘finfluencers’, employing methods such as ‘gamification’ in investment as it launches a new campaign to protect the public from investments that involve high risk and may not be suitable for them.

“The campaign is part of CySeC’s ongoing efforts to financially inform the investing public aiming to help investors make more informed investment decisions and reduce the number of people making high-risk investments that may not be suitable for them, as well as to help the public detect and avoid potential fraud,” CySec’s announcement said.

CySec’s president Dr. Giorgos Theocharides said that in the last years rapid technological development, market uncertainty and the COVID-19 pandemic have significantly contributed to the increase in the use of the internet to make investments.

“CySEC is particularly concerned by the increasing participation of young. inexperienced investors and the proliferation of complex product promotion material through social media and online platforms, as they may not always be what they seem,” he noted

In addition, Dr. Theocharides stressed that the already low financial literacy is further declining thus increasing the risk of young people not fully understanding the risks involved in a high-risk investment and not recognise possible frauds that may be hidden in online investments, putting them in a difficult position.

Social media is increasingly being used to promote complex investments such as crypto assets, with celebrities and finfluencers urging the unsuspecting public to invest in products and services for which they know almost nothing about and may prove completely unsuitable for them. The so-called ‘gamification’ of investing also raises risks as investing is presented as a simple game.

“It’s no surprise that these techniques are especially attractive to young people who are inexperienced in investing and are in danger of losing all their money,” Dr Theocharides said.

The campaign warns the investing public to not make investing decisions based on feelings and not yield to peer pressure but invest employing rational thinking and research. This new campaign enhances CySec’s mission in exercising effective supervision ensuring the suppression of provision of unlicensed investment services and the compliance of licensed supervisors with their legal obligations as well as their obligation to protect the interests of their clients. In the event of no-compliance CySec may impose financial sanctions and penalties.

Dr. Theocharides added that it is imperative for financial literacy programs to be created aiding the investing public to develop new skills, as recognised by the approved national strategy for promoting financial literacy.

CySec’s campaign includes a series of investing guides accessible via CySec’s website, it will utilise social media and focuses on communicating with young people.

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