ASIC is cracking down on social media “finfluencers”, issuing warning notices to 18 influencers it suspects are promoting financial products and providing financial advice to Australians while not holding a licence.
This is a part of a Global Week of Action Against Unlawful Finfluencers, where ASIC along with regulators from the UK, UAE, Italy, Hong Kong and Canada have joined forces to take measures against unauthorised finfluencers.
The nine regulators includes four separate state-based Canadian agencies, the UK Financial Complaints Authority, Hong Kong’s Securities and Futures Commission, Italy’s Commissione Nazionale per le Società e la Borsa and United Arab Emirates’s Securities and Commodities Authority.
They are collectively ramping up their enforcement in this area, including arrests and warning notices, and introducing consumer awareness programs to warn the consumers of the risks of taking potentially misleading finfluencer content as fact.
“Regulators across the world have joined forces to disrupt unlawful finfluencer activity,” ASIC Commissioner Alan Kirkland said in a media release on Thursday morning.
“It’s important that consumers separate fun from fact when it comes to finfluencer content. Popularity doesn’t equal credibility. Check their credentials and whether they’re licensed or authorised, before checking your money out.”
ASIC did not respond to further questions about the programme by time of publishing, but Commissioner Kirkland will be speaking at the Professional Planner Licensee Summit on 23-24 June in the NSW Blue Mountains.
Often, the finfluencers use social media to promote products and trading strategies and include appealing pictures of lavish and luxury lifestyle changes, deceiving consumers that if they take their advice they will be financially successful.
The regulator is particularly focused on finfluencers who present themselves as experts in investment and trading, as if they do not have a licence, it is illegal to operate a business that provides investment advice.
“Australia’s financial services laws protect investors and promote market integrity,” Kirkland said.
“They set minimum requirements and provide important protections for investors if something goes wrong. If you spruik or discuss financial products and services online, you need to carefully consider how the law applies to you and seek legal advice if you are unsure.”
Action against finfluencers has been a regulatory enforcement priority for ASIC for the past few years as more people utilise social media to reach audiences.
ASIC executive director for markets Greg Yanco told Professional Planner in early 2022 finfluencers who intend to use social media as an income stream should obtain a licence.
He further warned finfluencers to “think about your content carefully” and evaluate their content for providing financial advice if they remain unlicenced.
“If it’s influencing people, you’re going to need a licence even if you’re not being paid,” Yanco said.
The Corporations Act can slap high financial penalties for corporations and prison sentences up to five years for individuals operating financial services without a licence.
Yanco confirmed social media users who add phrases such as “this is not financial advice” and “do your own research” are still guilty of providing advice when unauthorised.
The Financial Advice Association Australia launched a consumer marketing campaign to both promote the value of advice as well as prevent consumers taking inappropriate advice from finfluencers.
A key purpose of the campaign was to communicate to consumers to not take what finfluencers say as fact as instead go to a licensed financial adviser.
On Wednesday, ASIC secured a win against four investors who participated in a “pump-and-dump” scheme, with all four pleading guilty.
These schemes involve investors attempt to pump up a stock via social media to increase interest and then sell at the increased price to make a profit.
This action from ASIC is part of the enforcement priority to crack down on unauthorised financial advice.
