268. The price of financial hype

0:00Steph McGovern:A lot of what these people are saying is complete hokum. There's now all sorts of people popping up telling you how to make money quick or how to pay off your debt quick. What are you thinking about all this when you see it? That is a red flag. Manosphere documentary by Louis Theroux. It was just money. These are just con men. They're motivated by money because soon as they were challenged, they'd back down on what they thought. So the Financial Conduct Authority was able to take a number of these fin fluences to court over, I think it was crypto selling, because that is a regulated industry. The challenge with tax advice is it's not regulated.

0:32So anybody can give you tax advice, but if they're doing it in this way, then they will now fall foul of this law.

0:49Steph McGovern:Hello and welcome to The Rest is Money with me, Steph McGovern. Now with me today is Stella Creasy, the Labour and Cooperative MP for Waltham Store in London. Now, Stella is a prominent consumer rights campaigner, probably best known for her work to regulate high cost credit, which included successfully pressuring the government to give the Financial Conduct Authority powers to cap payday lending loan costs. Stella's got a real passion for helping people in debt and today she's going to chat to us about her campaign to regulate influencers on social media who give people misleading tax and financial advice otherwise known as financial influencers.

1:31Steph McGovern:Finfluencers is the phrase that they're often referred to now. So here's my interview with Stella Creasy. So Stella thanks for coming in to talk about this because it's really interesting what's happening online in terms of financial advice, isn't it? There's now all sorts of people popping up telling you how to make money quick or how to pay off your debt quick. What are you thinking about all this when you see it? I'm really worried because a lot of what these people are saying is complete hokum, but we are living in a country that's had a cost of living crisis for donkey's years. You've got millions of people who are now self-employed or set up a business of their own.

2:06They're really susceptible to this stuff. And these people make their money off the likes and the advertising for it and the fact that they get people then drawn into the seminars that they run about how to fiddle your taxes, which is essentially what they're doing. I think it's gone unnoticed. That was the thing that really, really worried me about it. So I spend a lot of my time when it comes to financial things being a bit like Bob Peck in Jurassic Park. Everyone else is like, look at the Tyrannosaurus Rex. And I'm like, look at the Velociraptors. And I felt like that about payday lenders. I felt like that about buy now, pay later companies.

2:38It was like, look, you could see these people who are exploiting vulnerable people. I could see it in my constituency. I represent God's own country of Walthamstow. It is the best place in the universe as far as I'm concerned, but it is a community with a lot of people for whom there is too much month at the end of their money. And so people offering them ways to either borrow or to try and save money to actually get them into more trouble, well, that gets my back up. And I'd been worried for some time and talking to various experts like Dan Needle about, I'm seeing all this stuff on my social media can that be true because i also think it's fair to say like the tax code in this country is not simple it's so complicated and like it drives me crazy that you can set off against your taxes taking somebody out to lunch to try and promote your business but not say the child care that you might need to be able to be in that lunch so there's lots of places where i think it doesn't work but fundamentally these people as far as i'm concerned are preying on people like my constituents and i've had casework about these people as well so you've had people come in to talk to you about in your constituency.

3:35And one of the things about doing a lot of work on kind of financial matters is the shame that people feel. Yeah, totally. They feel embarrassed that they got caught because people will say to you, well, if it sounds too good to be true, it is. But we've got to get over that as a country because so many people are getting caught out by this stuff. And these people are, you know, living off in Dubai, scot-free and boasting about how they're claiming holidays off the tax manual, this sort of thing. Yeah. And look, you know, everyone knows about tax avoidance and kind of maybe big major people and the stories in the press and the government was bringing forward this legislation to be able to tackle that and the kind of professional companies and I was like yep that's important but millions of people are being hit by these people and that's just going under the radar so it's the same principle we need to do something about that too.

4:18There's loads I want to get into on this but let's start by just... First of all my Instagram feed is really off.

4:26Steph McGovern:So let's just drill down into the people you're talking about here and what the motive is for them. So what you're saying is these people are putting out what? They're putting out soundbites, which is getting them clicks. As ever, there's always a term for it, which is finfluencing. So they are offering financial advice online, not because they have, I mean, some of them claim to be accountants or claim to be qualified, but they're doing it. And obviously the way the online world works is that the more outlandish the claim they make, the more likely people are to watch it, the more likely they are to go viral, the more likely they are to draw attention to themselves and their businesses and the ways that they're making money.

5:02So the finfluence of it is financial advice online. There's lots of different types of things. So there's people offering you crypto schemes and all sorts of things. The one I'm particularly concerned about at the moment is tax, just because for a lot of people, their tax bill is a challenge, especially if they're self-employed. And what these people are doing is saying, oh, no, no, don't worry, don't worry. You can minimise what you have to pay in tax if you just use this clever wheeze. And they're not clever wheezes. So there's some research showing you that three quarters of the financial advice online is actually incorrect.

5:31It's one thing. It's a very bad thing. Obviously, people lose money. It's another thing. Actually, they get a knock on the door from the taxman because they filled in an incorrect form and then they get a fine as well or sometimes even worse. Yeah.

5:41Steph McGovern:Before we get into the meat of this, let's go to a quick break.

5:49Steph McGovern:We're delighted to say that this year the rest is money is being powered by Octopus Energy. and that means we get to welcome back the founder of Octopus Energy, Greg Jackson, now CEO of it. Time for a quick fire question. What's the one bit of advice you give a young entrepreneur? Maybe it's stuff that people don't normally talk about. Don't be arrogant, but do be confident. Almost by definition, as an entrepreneur, you're doing stuff that other people didn't think is going to work or that they've discounted or dismissed. so you have to be confident to believe in your own ideas and your ability to deliver them but you should still listen to everyone else and learn from them and not be arrogant i think that is the secret to being able to build something special but successful well cheers greg and thank you for powering this episode of the rest is money

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7:12Steph McGovern:some of the cases what they're saying is is wrong in the sense of it's not good advice but it's not necessarily encouraging illegal stuff so it's not like some of it is tax evasion but some of it is the tax avoidance which is tax avoidance but it's things like so it's telling people obviously to put their kids on their business now obviously there are people who do work with their parents right so they are part of a legitimate business but there's somebody saying oh you know from the age of 13 you can put your kid on the business and then you can claim 12 and a half grand against that but that's clearly not true but it's not illegal in the sense of there are people who work with their family members so part of it is absolutely exploiting the fact our tax code is complicated and there are scenarios in which that is legitimate yeah giving it as a wheeze like there's some people who do kind of 10 ways that you can earn a million pounds tax-free was one of the claims and it was things like that it was things about flipping properties and saying that you didn't need to pay tax.

8:07That's just not true. But it is more complicated than just being it straight out illegal.

8:12Steph McGovern:And how much of a problem is it then? Is this just getting bigger and bigger in terms of the number of people doing it? We've seen an increase in the numbers of people being fined by HMRC and an increase in the number of HMRC claims that people aren't paying the tax that they're due. And so there are people are being caught up with. And there's an increase because we, I mean, we've talked loads on the show about that gap between what should be coming into HMRC and what actually does because lots of people get it wrong particularly small businesses and things so I don't think there's malice in that right I think there's a lot of people who genuinely struggling and think right oh actually if I can do that great and that's where these people are preying on them because they're you know it's never a risk-free option for them it's always about getting you to click their videos share their stuff get into their seminars and then you're ending up paying thousands of pounds to be on their courses to be told how you can save money on your tax bill and you're not.

9:05But it's also the risk then that you are going to do something that means that the tax people are going to come after you and no business wants that. You know, I would much rather HMRC, and I'm hoping from the work we've done in Parliament, HMRC is getting the very clear message that we want them to go after these people and not my constituents who are, you know, barely scraping by as small business or sole traders thinking they're doing the right thing and finding out they're doing the wrong thing. Yeah.

9:29Steph McGovern:And is it easy to find these people who are doing it? Yes, absolutely. Like I say, just look at my Instagram. They're all laughing a go at you. No, it's not just they're all laughing a go at me. It literally comes up FinTalk. It's the sort of thing. It's all over Instagram. It's all over TikTok. It's all part and parcel of the online world that people are now living in. There's millions of people seeing this stuff on a daily basis. And if you see it being repeated enough times that somehow... The thing about how you can claim 300 quid in Amazon vouchers for free, if you do it, it's something called a trivial benefit.

10:03You do it£50 a time and you can claim all of this and you can buy yourself a treat. Like, take a step back for a moment and you think, well, if that was the case, that's not right. But that is what these people are saying. And it's not the truth about how a trivial benefit works. but if you see that being circulated enough times and i've seen that in hundreds of different videos from hundreds of different people doing this people think it's true the other thing i would say is of course in the online ai world the information these people are pumping out then gets scraped and put into kind of searches so then it becomes kind of truthful in its own right because people are reading it online yes because it becomes circular yeah which was one of the

10:38Steph McGovern:problems with wikipedia was once a you know a media outlet would use something on wikipedia it then became the evidence for the source of wikipedia and that was at one point somebody changed my wikipedia to say that i was howard marx's assistant and i was right and i was personally flying planes full of drugs which given that i'm scared of flying i was like i'm loving this i'm loving this alter ego that i have but yeah like this stuff does get circulated and it gets scraped off the internet so it it then becomes something that people have heard several times and of course the law of averages more people hear it the more people think oh well that might be true yeah and and obviously there's all algorithm element to this which is you know once you start looking for money stuff then you're just going to constantly get all of this pumped at you and the other thing i would say is like absolutely like i grew up in a household where my dad used to stockpile copies of witch right we could never just buy anything it was drilled into me that you had to have a look you had to go and look at the reviews you had to do homework like pity my poor partner whenever we tried to like buy a sofa and he was just like what about that i was like no no no we need to like yeah so i want people to have access to good advice because one of the ways that you stop people being ripped off is good advice and there are good advisors out there there are people giving you genuine information which is why when this stuff is kind of slewing around as well I think it's really important that we recognize it for what it is which is promoting tax avoidance and I want to talk to you about that about the the issue with financial literacy and just the need for that as well but on this particular point then what is the case at the moment with people putting this out because that's what you're trying to change aren't you in terms of regulation changed it.

12:07And it was, you know, it was really good. The Treasury ministers were like, yeah, actually, this is a problem, isn't it? Like they hadn't really thought about it or spotted it. So the government was bringing new laws to tackle companies who promote tax avoidance to say that was really aimed at those kind of high end, high net worth individuals.

12:24Steph McGovern:Yes, the ones Dan Needle always goes for and tells us about. Exactly. Those people, I actually think that those people can afford the tax bill that comes when they get caught, right? I'm talking about the people who can't afford, you know, who couldn't afford it in the first place. And so what I've done is to get the government to clarify that all the legislation they brought in will apply to these people as well and how you define what monetary gain is. And there's going to be guidance issued to HMRC. And obviously HMRC is a independent organisation, but it's basically saying like, we want you to go after these people.

12:54So, you know, fingers crossed that some of them are going to get a knock from the taxman because of course they've all had to fly back from Dubai.

13:00Steph McGovern:Yeah. Yes. Yeah. But we have seen, haven't we, recently cases of influencers being taken to court. So the Financial Conduct Authority was able to take a number of these influencers to court over I think it was crypto selling because that is a regulated industry. The challenge with tax advice is it's not regulated so anybody can give you tax advice but if they're doing it in this way and we can prove that they're doing it in a way it's a monetary gain and they know it's harmful then they will now fall foul of this law and it's just finally going through parliament yes so what what's your you know what do you want the end result well it's a um for me it is it's sort of the al capone thing because i also see these people and i think we should talk about the manosphere right because when you look at the manosphere and obviously people have seen the documentaries there's a lot of talk about it understand there be a lot of concern about the kind of influences the ideas circulating around young men and people talking about the violence and the anti-semitism and the misogyny.

14:04But I thought, well, actually also, look, there's a lot of this finfluencer stuff as well. So, you know, for me, there's an element here where I think of it as the Al Capone approach. It's actually a lot of these people, because what they're doing and what they're saying is tax avoidance and they are promoting it and they're talking about doing it themselves. I'd like to see HMRC going after those people as well. Because now when I look at a lot of these people, it's not just about financial advice. They're selling a lifestyle. They're selling a particular ethos. So one of them last night accused me of viciously attacking him about the stuff he was promoting.

14:43He's a really terrible man in terms of... I've talked to people... I mean, a young man killed himself because of being part of this man's guns. You know, but I've talked to people who've been hit by lawsuits by this guy and he put up a message saying that it was because he wanted to buy churches and support Christianity. That's why I was viciously attacking him. I was like, no, it's nothing to do with God. It's everything to do with the con.

15:05Steph McGovern:That's a really interesting thing. So when I watched that Manosphere documentary by Louis Theroux, I was really fascinated because I think, you know, there is definitely a need for people to be helped to achieve what they can in life. I grew up in an area where I grew up with a lot of those lads who were told they were thick because they didn't have the structure at home to do well in their exams. They were told often, you know, they weren't the ones that were going to do well in life. It's all about ethnic diversity and it's all about being a woman. And they're the people who are going to be given an extra lift.

15:38Steph McGovern:And you lads have always had it easy. So we're not going to help you anymore. And I've seen that very much play out in where I grew up. So giving them some self-worth and all of that makes sense. But what was really shocking me in the Manosphere documentary was it wasn't even about that. It was just money. These are just con men. They're motivated by money because soon as they were challenged, even by their partners who were women or whatever, or Louis on, you know, what would you say if your mum said this? They'd back down on what they thought. It was just money. But it was all about getting you to sign up for this scheme.

16:10Yeah, sign up for this better life where you're going to feel. And look, you know, we should be honest. We live in a country where people can inherit a million pounds tax free. In my community in Walthamstow, it is the bank of mum and dad that is the difference between able to take risks, whether it is going to university or setting up your own business or even getting on the housing ladder. And you can see that divergence getting bigger and bigger. The kids who have families who can borrow on their behalf, use an asset to support them, and the kids for whom that is just never going to be an option.

16:39and their families that are living with 15, 16 grand worth of personal debt on various credit cards. It's always why I've been obsessed with it, because you can see it's not just about the money. It's about the risk. Like we are now living in a world where these kids are going to have probably seven different jobs in their lifetime, two of which haven't yet been invented. It's a fundamentally different world to the one you grew up in. And if you're already coming from a background, like you say, where people have kind of written you off or you don't have the resources to be able to take chances, then, of course, somebody coming along and being like, actually, you're worth something.

17:09and I'm going to teach you the code. I'm going to show you how the matrix works. Like that is very appealing. Yeah, totally. And that's why I'm so angry with these people as well because I really feel like they're preying on people at their lowest, which is that sense of the world is a really difficult place right now. How on earth do I help my family? How on earth do I succeed? So somebody come along and saying to you, hey, you can take your family for a holiday. Just pretend to the tax man it was work. Well, you know, we can all sympathise with that. But we can all see the point at the risk that that is that that's the person who's going to get a fine and then they're going to be further and further back in their financial status.

17:43Steph McGovern:So what I think when I'm looking at all this happening is a lot of this still comes back to the fact that people don't really have much financial knowledge. You don't leave school understanding finance. And, you know, it's something Martin Lewis has gone about for years, I've gone on for years. There is a real problem in education in that we're not teaching stuff around it. So we're now supposed to be. Yes, but it's only in secondary school at the moment and it's still in a citizenship lesson and you don't do them that often. It's like it's still not a core learning, is it, in school. And that is part of the problem is you're getting loads of whatever young people coming out of school, hearing people who they think have done well because they're seeing this version of them on social media where everyone is now.

18:32Steph McGovern:And they're thinking, right, that's how you do it, because no one's taught me up to this point how you make money. legitimately. But the other thing I would say about this is actually almost something a bit darker. It's like I know in my local community in Walthamstow that my residents know exactly how much money they don't have. They actually are very good at budgeting. They know how expensive things are getting. So if somebody comes along and shows you a cheat code, that feels like your only option. I mean, part of this is also about where are people accessing affordable finance? You know, when I first came into Parliament in 2010, we still had a credit union in my local community that's gone now so actually for people to have stable forms of finance where they can invest in their idea like the kids in my community are bright and smart i promise you stephan yes not so much but like most of them say those kids are worth fighting for yeah and one of them could cure cancer but they don't have the same opportunities to realize their potential and instead they're in families which precarious is the word for it right so actually they know you're right finance can be confusing but also they just know they don't have money yeah somebody's offering them a fast track into success and they're seeing it you know they're seeing the cars and yeah they're then also seeing the stuff about women will be submissive to you and you'll be on telly you'll be famous you know it's it's tiktok famous isn't it like i don't think i don't think i know it's really important whenever we see all this stuff everyone gets very excited it's like adolescence everyone gets very excited it's like it's not about judging it's about understanding how we got to that state and saying actually how do we create an alternative pathway where actually because you are bright like the kids in walthamstow are entrepreneurs they're much more entrepreneurial than i ever was this is what i say all the time though but they're not assessed on that in education so you know again but even if they could even if they could like get it's like i would love to bring back child trust funds because there's now a generation of kids who are getting a chunk of money at 18 but those have disappeared yeah and actually what all the evidence showed us was that families on the lowest incomes were the ones who are using those the most and saving the most for their kids so they had options yeah like i see that all the time with like the poorest people in um you know where i live saying to me or how do i put a bit of money aside i don't really have any but like i don't want the same thing to happen to my kids or whatever but there is there is definitely a problem you're totally right like i say this all the time about young people the ones who have got the hardest lives are the biggest risk takers because they understand risk better than anyone else they're the most resilient they're the best communicators quite often because they've had to talk themselves out of so many situations or deal with those situations but education is telling them that they're not very clever and that they're not going to do well in life because or you know you education needs to catch up with where these kids are yes and also we need to recognize it's not just it's not enough for them to have a great education if you're going to need a chunk of cash to be able to you know to commit to go to university i mean there's a good example now about all the debates around plan to student loans like i do actually think there's a problem there because people thought they'd signed up to one level of debt yeah and in fact they've got another yeah so like i will tell kids to get into that debt because it is a good opportunity but i need to be able to be confident they know what debt they're getting into yeah because for the kids who've got mum and dad who can make up the slack that's one thing if these kids don't have that because mum and dad have got massive personal debts or they've got other siblings it's too much of a risk and they know that so they know that what we're telling them are the options aren't really the options for them not because they couldn't do the course or because they're not bright but because we haven't dealt with the inequalities in the system that mean this is a harder choice for them but I just I hate it when people particularly in parliament talk about people being misled as if people in my community are stupid they're not stupid they're being short-changed yeah and i think as well though like i think i'm probably telling young people the opposite to you in terms of i'm saying don't take on that debt don't go to uni let's be more entrepreneurial apprenticeships vocational training i know it's not got the parity of esteem it really should have with academics but that it is that thing of the stigma around debt it's like it's fine to get into debt it's fine to get into debt at uni and then And that kind of exacerbates this view.

22:42If you've made a choice that this is a course you want to do, we've got to make that happen for you. And part of it may well be debt because the honest truth is you probably will earn more. You're right about vocational qualifications. You know, we've had this debate for donkey's years in this country. We've never sorted it out. And you look at other countries like Germany and it's a much more equal system. But one of the reasons I took on the payday lenders is because people used to say, is the dot in the wrong place? And you were like, no, no, no, it is that level of interest. And then all the companies kept saying to me, oh, well, it's technology and you wouldn't understand grandma.

23:11And I was like, no, no, I understand the ripoff and I understand the compound element of this. But you're not being clear with people about that. And where we get to is when people say, well, if we're clear about the numbers, people know the risks they can take on. That is true for some debts. Some debts are always exploitative. And that's where I think it's right for the government to step in. So that's the thing for me about this tax avoidance stuff is like it is not fair to ask people to be able to navigate a complicated tax system. them we need to simplify the tax system but in the meantime we need to reduce the level of harm that comes from people telling you that you can avoid tax in this or this this way not because they take a cut of the money that you save but because it helps promote their business yeah the

23:50Steph McGovern:other thing i wanted to ask you about as well is um you and i both do work with step change really important charity helping people um with their money problems you know and you've already mentioned the shame that's a big part of people not getting the help they should be you've got to get it as soon as you can what really fascinated me is you know on this show we're always looking at the macro picture and talking about you know the big statistics on what's gdp what's inflation and all of this and you know when you go back home none of that really matters everyone's just thinking about what's happening in their community well they think about like the cost of a pint yes exactly i was at the cost of popcorn because my kids like they like they probably cut them they would bleed popcorn like they just wolf it down is it going up in price well it used to be a quid a packet and now it's£1.25.

24:33And it's probably smaller. Well, yeah, shrinkflation as well. Yeah, exactly. But for me, that's my litmus test about what is happening. Like, actually, can I put something in front of my kids that keeps them quiet for just like five minutes,

24:44Steph McGovern:which is a bag of popcorn, and I can think. Lord, I want to ask you in terms of how we tackle this, but let's go to a quick break.

24:54Steph McGovern:One of the things we're often thinking about is debt and household debt, business debt. And the picture on that front has got better. A lot of it because of what happened during COVID. And then those people who had that bit of extra money thought, oh my God, this is like a hell of a rainy day. We need to think about future ones and manage to pay down some of their debt. But what I found really fascinating is actually what's the real story behind those numbers? And talking to StepChange, they were talking about how actually now credit is harder to get. It's more expensive. So that debt is masked by people who are in arrears so it's people and they'll be your constituents you're talking about who now used to pay their bills on credit and pay off things with credit cards and get into debt that way and now just not paying the bills and that's really dangerous as well isn't it like this sense of okay overall debt figures might be down but if people are just not paying the bills we've got a huge problem totally um and it's and it's people understanding what they can do like you say the the reason why shame matters so much is the thing that breaks my heart is when somebody asks for a meeting with me and they're like i'm gonna lose my house on friday and it's monday and you're like there's very little we can do in seven days you know we've got to try and get you on the housing register because they've got behind in a whole series of debts and it's it's spiraled and spiraled and spiraled and that's because they thought that they could keep juggling and juggling and juggling um and the way in which credit has been sold in this country has perpetuated that idea you know that was always the buy now pay later people i was always wary of instantly wary of any credit company that would say to me oh no we have a very low level of default and i'd be like really because a lot of people are struggling and they'd be like oh well no as long as people pay back to begin with we'll keep lending to them and you're like why that is a red flag yeah that is a red flag we do need to have more affordable credit in this country i'm not sat here in a sackcloth telling people that you shouldn't want to take your kids out at the weekend and you shouldn't want to lead some kind of semblance life because that's where the the fin fluences come in with the cheat codes what we have to do is help people manage what is a good debt and what is a bad debt so people would say a good debt is the debt that keeps you you know in a house and it keeps you a roof over your head and it gives you some stability and it gives you an asset a bad debt is one that spirals and you don't know what you're paying back and actually that debt in itself is getting you into debt i'm doing some work with um step change in the center for responsible credit we're hoping to do a workshop in parliament um in the next couple of months about that and what that looks like a workshop in parliament what to teach the politicians to raise the issue because the honest truth is we've kind of accepted as a country that personal debt is just there and that really worries me because it's all very well if you've got the bank of mum and dad to fall back on but for a lot of people the washing machine breaks down it's game over and that tips them over into the spiral but on that though if we had the buy now pay later people here if we had some of the people you might see is providing expensive credit, but they're often the people who are the only ones who do give credit to people on low incomes who don't have the credit written and whatever else.