AFSLs paying finfluencers questioned by ASIC

Some Australian financial services (AFS) licenses who are paying finfluencers to promote their products on social media are being “engaged” with by the corporate watchdog.

The Australian Securities and Investments Commission (ASIC) said in a question on notice from the Standing Committee of Economics that it was reviewing select finfluencers to understand their business models and how the financial services laws applied to their activity.

ASIC’s review included social media platforms such as Facebook, Reddit, Instagram, YouTube, and TikTok.

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“We are monitoring developments in this space and commencing engagement with finfluencers to understand their business model and how they are considering the application of the licensing framework in the Corporations Act,” it said.

“We are also engaging with selected AFS licenses who are paying finfluencers to promote their products on social media, including TikTok.”

ASIC noted increased levels of retail investor participation and interest in investment was to be encouraged but it needed to be in an informed, safe, and sustainable way.

“However, some of the finfluencers appear to be providing advice and are getting paid by other financial product providers to promote their products,” it said.

“As most finfluencers do not hold an AFS license (and not subject to an exemption) they are not subject to the requirements that apply to licenses – including having adequate arrangements to manage conflicts of interest or to provide financial services efficiently, honestly and fairly.

“We are concerned that inexperienced investors may be increasingly acting on financial advice from unlicensed providers. This may result in conflicted or poor advice being provided to users who may suffer financial loss. It also provides finfluencers with a competitive advantage as they are not subject to the costs and burden of regulation that other AFS licensees are required to comply with.”




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At long last some people seem to be waking up to the fact that ASIC's approach of persecuting licensed advisers while ignoring unlicensed advice, is leading to much worse outcomes for consumers.

throw in media commentators, switzer type journalists who also run funds management businesses, and the barefoot one.

spot on. And then as an example, a finfluencer writes an article about the merits of say unlisted property or private debt, and oh by the way if interested here's an ad next to the article or a link, or in the article I give the example of Mayfair funds as a good example of this type of investment. What does the reader do? Goes to fund page via the link, invests dumb money, the finfluencer/journo gets paid or advertisement money rises.

At long last ASIC is paying attention to the right side, being those who are not licensed. The amount of content giving advice (mis-advice) on YouTube and other social media platforms from unqualified individuals is astounding. I agree it gives these individuals unfair advantage to those who pay by the rules and they should be shut down. I only hope ASIC do not take years to do research and take action. Bozo, just because you may not like what Peter Switzer has to say does not put him in the same basket, he is licensed and subject to the same rules as all of us who are licensed.

No they are not the same. They give very clear guidance in the media about how people should invest - and there is never a disclaimer or disclosure at the bottom of media articles, that the advice is General or Factual, and disclosing their Interest in a Funds Business called XYZ. The regulator allows them to wear 2 convenient hats - one the journalist hat, and the licensed hat. In my opinion you can't be both or should at least disclose your conflict. I'm also surprised Journalism associations don't restrict them from owing conflicted businesses. This is general comment, not related to any individual.

Hopefully ASIC take a look at the pump n dump activities in the small cap space on the ASX. People are being issued free options to actively promote (pump) the stock to all their followers, mainly on Twitter. While everyone is buying they are the ones selling.

As a licensed adviser I look forward to funding ASIC's investigation into unlicensed advice. However everyone knows that ASIC is to incompetent and lazy to do anything about it.

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