ASIC clamps down on use of finfluencers

The Australian Securities and Investments Commission (ASIC) has outlined how the law applies to financial influencers, and the licensees who use them.

In particular, the corporate watchdog highlighted activities where finfluencers may contravene the law if they were unaware of the legal requirements when discussing financial products and services online.

This included financial product advice, dealing by arranging and misleading or deceptive conduct.

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The rules also affected Australian financial services licensees who worked with finfluencers.

The regulator said: “You may be liable for misconduct by influencers you use, so make sure you:

  • Do your due diligence. If the influencer is acting on your behalf, and is therefore your ‘representative’ for the purposes of the financial services laws, this triggers other obligations (including ensuring they are adequately trained and complying with the financial services laws);
  • Put in place appropriate risk management systems and monitoring processes to make sure the influencers you are using are not providing unlicensed financial services;
  • Have sufficient compliance resourcing to monitor the influencers you use; and
  • Consider if you have engaged an influencer to promote a financial product that is subject to the design and distribution obligations and whether you have taken reasonable steps so that the influencer only promotes the product to consumers in the target market.”

Looking specifically at finfluencers and financial product advice, ASIC said: “You can share factual information that describes the features or terms and conditions of a financial product (or a class of financial products) without giving financial product advice.

“However, if you present factual information in a way that conveys a recommendation that someone should (or should not) invest in that product or class of products, you could breach the law by providing unlicensed financial product advice.

“If you’re an influencer who receives benefits or payment for your comments in relation to financial products, you're more likely to be providing financial product advice because it indicates an intention to influence the audience."

Examples of content which were likely to be financial product advice were “I’m going to share with you five long-term stocks that will do well and which you should buy and hold” or “ETFs will make you a guaranteed positive return”.

However, descriptions of different assets without any recommendation or tips on money saving or budgeting were not classed as advice.

Finfluencers should also consider whether they needed an AFS licence, be familiar with relevant regulatory guidance and doing their due diligence on who they were paid by (including non-monetary benefits).

ASIC commissioner, Cathie Armour, said: “The way investors access information is changing. 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”.

In 2021, an ASIC survey found that 33% of 18-21 year olds follow at least one finfluencer on social media. A further 64% of young people reported changing at least one of their financial behaviours as a result of following a finfluencer.

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Does that mean that someone who writes about financial matters including general advice in a regular newspaper column, but then recommends to a reader that they should invest in specific index growth fund is what this article is discussing ?

What if that journalist recommends a specific indexed growth manager that is named in his column but does not hold an AFSL or is an Authorised Representative of one,

I'm wondering why ASIC hasn't done something about this before.
I can't think that any financial planner would be allowed to get away with this without censure

Scott Pape did exactly this, nothing happened... the bloke worked for hostplus for years doing education to convenience people to invest in hostplus before he wrote the book that recommended not only a super fund hostplus but also the exact investment option balance index..... go for your life finfluencers keep getting money from products to sell sell or write a book but just do recommend anything just say you are giving financial education about financial products and you will be sweet.... ASIC only chase licence advisers who make a spelling mistake in an SOA

He also worked for ASIC. Ironically he made a video detailing what to look for in a financial adviser which was on the moneysmart website for a while.

Yep, good luck with trying to regulate this. BTW how will ASIC monitor the juristriction of the clients and the finfluencer's ablity to provide advice in the finfluencer clients duristriction. i.e. an Australian finfluencer with a NZ client.

It's pretty clear ASIC want to eliminate Financial Advisers. Tik Tok and Instagram are like the wild west. It's been like that for a long time and ASIC have been more focused on sending Advisers to jail over defective fee disclosure statements..."spelling mistake...defective go to jail" , "wrong date..defective go to jail" .."Would you like your $50,000 fine for yourself and $100,000 for your corporate entity or both Mr Adviser. " meanwhile the AMP CEO, the middle manager, Scott Pape, the 20 year old on Insta or the Guy on tik tok selling bitcoin can do anything, "these spelling mistakes are a national disgrace."

Very concise, well done. PS. Is Kochie a finfluencer?

in our circle we call him the barefoot idiot

Only ASIC could turn this into an opportunity to go after advisers. Everyone know the finfluencers are breaking the law, with no cares at all. ASIC response? Threaten advisers who work with finfluencers because it is easier for them to prosecute an adviser than a non adviser. ASIC is too incompetent and lazy to deal with the real party causing harm to consumers.

21 September 2021 Ms Jane Hume: Finfluencers not to be banned
Both the minister for superannuation, financial services and the digital economy, Jane Hume, and the corporate regulator’s chair, Joe Longo, have pointed to dangers of finfluencers but will not look to ban them.
“We don’t believe in establishing unworkable rail guards that inhibit progress and innovation. I have absolutely no interest in perpetuating a nanny state culture where we resort to banning things to save people from their own follies,” Hume said.............
Well Ms Hume, seems ASIC have changed their tune about Finfluencers.
Ms Hume, Frydenberg & the LNP are happy to KILL REAL ADVISERS with mass BS over regulations, triplications of FDS / Fee Consent docs, the most unworkable guard rails against advisers at every turn and the total and utter nanny state culture against advisers.
Yet Ms Hume is happy for the Wild West of Finfluencers to fleece the masses, "from their own follies".
Ms Hume, Frydenberg & the LNP you disgust me.
Ms Hume, Frydenberg & the LNP you do NOT deserve another term to keep KILLING REAL ADVISERS.
I can't wait to vote against you and encourage our clients to vote against Ms Hume, Frydenberg & the LNP.

Your clients won't need a lot of convincing. They have seen the fee increases, they have seen the completely insane red-tape nightmare and they have seen how much harder we are working. They aren't stupid. Hundreds of thousands of Australians have lost their financial adviser completely. If there is any doubt in the minds of our clients about our judgement on the coalition, next week's budget will be an opportunity to sink the boots in on this disastrous coalition government.

Hume is probably already reviewing her options for work after the next election. Even her facebook posts are down to about 1 per month now. She has lost interest.

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