The corporate regulator has sent warning notices to social media finfluencers as part of a global crackdown on the “unlawful” financial promotion.
On the back of its participation in the Global Week of Action Against Unlawful Finfluencers along with eight other international regulators, ASIC said it has issued warning notices to 18 social media finfluencers.
According to the regulator, it suspects that these finfluencers have engaged in “unlawfully promoting high-risk financial products and providing unlicensed financial advice to Australians”.
Key to ASIC’s concern is related to “so-called trading experts” that it said are providing unauthorised financial product advice and promoting high-risk, complex investment products that can cause “real consumer harm”.
This includes products such as contracts for difference (CFDs) and over the counter (OTC) derivative products.
It also said the social media finfluencer content often includes “misleading or deceptive representations about the prospects of success” related to taking part in their trading strategies or the products they promote, as well as posting images of “lavish lifestyles, sportscars and other luxury goods”.
“We are seeing a pattern where these unlicensed finfluencers invite consumers to join their closed communities or forums to learn their secrets to success or copy their trades,” said ASIC commissioner Alan Kirkland.
Noting that Moneysmart had previously found that 41 per cent of young Australians seek financial information or advice from online sources such as social media, ASIC urged investors and consumers to check finfluencers’ credentials on its Professional Registers Search tool.
“Australia’s financial services laws protect investors and promote market integrity. They set minimum requirements and provide important protections for investors if something goes wrong,” Kirkland said.
“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.”
The regulator stressed that, unless a finfluencer is licensed, an authorised representative or exempt, they’re not legally permitted to carry on a business of providing investment advice in Australia.
ASIC added that it conducts targeted monitoring of financial discussion by finfluencers that feature or promote financial products and, “where we see harm occurring, we will take action to enforce the law”.
The regulator said this crackdown is part of coordinated actions on unauthorised finfluencers that ASIC and eight other regulators from the UK, United Arab Emirates, Italy, Hong Kong, and Canada took last week.
“Together, the nine regulators used a combination of regulatory and enforcement powers including arrests, warning notices, website takedowns, educational schemes with authorised finfluencers, and consumer awareness programs to put unauthorised finfluencers on notice and warn consumers of the risks of unauthorised and misleading finfluencer content,” ASIC said.
Kirkland added: “Regulators across the world have joined forces to disrupt unlawful finfluencer activity.
“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.”
He also claimed that following the release of INFO Sheet 269 Discussing financial products and services online (INFO 269) in 2022, there has been a “noticeable drop” in the amount of social media posts spruiking financial products and services by unauthorised finfluencers.
“In Australia, after ASIC issued INFO 269, we saw that many finfluencers changed what they were saying or became licensed or authorised representatives to comply with the law,” Kirkland said.
“Australian Financial Services licensees who engage influencers also improved their due diligence and monitoring of finfluencers to ensure they don’t provide unlicensed financial services and that consumers are not misled.”
