ASIC warns finfluencers
The Australian Security and Investments Commission (ASIC) has issued a clear warning to ‘finfluencers’ and published an information sheet - INFO 269 - providing guidance about the legal responsibility inherent in promoting or discussing financial products and services online.
The Guardian has indicated that it’s no idle threat given ASIC have already moved on legal action against some high profile finfluencers for being ‘unlicensed’. ASIC is taking aim at social media stock-tippers who promise big returns or make claims such as the investments they recommend are as good as putting money in the bank. The regulator also warned influencers who earn money through affiliate links that send readers to online brokers that they may be providing a financial service, which also requires a licence. It’s a warning to be taken seriously as you can face up to five years in jail for breaking the law.
Young people, who commonly turn to social media for advice, are viewed as most at risk of being misled by unauthorised or inappropriate financial advice. ASIC’s research in 2021 found that 33% of 18-21 year olds follow at least one financial influencer on social media and a further 64% of young people reported changing at least one of their financial behaviours as a result of following a financial influencer.
In terms of finfluencers and creators promoting financial products, the warning from ASIC Commissioner, Cathie Armour was clear:
‘It is crucial that influencers who discuss financial products and services online comply with the financial services laws. If they don’t, they risk substantial penalties and put investors at risk. ASIC monitors select online financial discussion by influencers who feature or promote financial products for misleading or deceptive representations or unlicensed advice or dealing. If we see harm occurring, we will take action to enforce the law.’
Check out ASIC INFO 269 - it’s a guide that outlines how the law applies to social media influencers, and also the Australian financial services licensees who use them as they can also be liable for any misconduct by the influencer.
The INFO 269 Guide:
highlights activities where influencers may contravene the law by providing a series of practical examples for influencers on:
financial product advice
dealing by arranging
misleading or deceptive conduct
explains issues for influencers to consider including:
whether an AFS licence is needed
being familiar with relevant regulatory guidance
doing their due diligence on people who are paying them (including non-monetary benefits)
reminds AFS licensees who use influencers to:
do their due diligence
have appropriate risk management systems and monitoring processes
have sufficient compliance resourcing to monitor the influencers they use
consider their design and distribution obligations.
AiMCO’s Best Practice Working Group is currently refining a guide for members based on ASIC’s recent release.