Consumers need better protection from finfluencers

The regulator’s guidance on ‘finfluencers’ is welcome but more needs to be done to protect consumers, according to Stockspot.

Earlier this week, the Australian Securities and Investments Commission (ASIC) announced guidance regarding financial influencers and warnings for licensees who sought to use them.

However, Chris Brycki, chief executive of robo-adviser Stockspot, felt there was still areas where consumers were insufficiently protected.

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He said: “This guidance provided by ASIC is welcome and much needed to protect consumers and provide clarity for finfluencers. We think this is an important step forward to promote transparency and remove conflicts of interest. Currently, it’s difficult for consumers to distinguish between what is a sponsored affiliate advertisement versus an unpaid review or testimonial.

“Finfluencers can provide some great money tips, for example around saving and budgeting. There are also areas where finfluencers can adversely impact consumer behaviour, such as market speculation and herd mentality, when recommending particular products.”

He highlighted three areas of particular concern; banning adviser finfluencer product commissions, licensing finfluencers who provided general advice about their investing experience and banning paid testimonials.

“At present, licensed financial advisers who are also finfluencers and promote an investment platform. They can receive a revenue share fee for each lead they generate without disclosing their commercial relationship with that platform. This needs to be banned as it doesn’t comply with the best interest duty and code of ethics that came out after the banking royal commission.

“A finfluencer should be licensed before publishing their portfolio or what financial products they are trading or investing in. Otherwise, by ‘design or effect’ (as highlighted by industry submissions to the SEC) there is a high chance the audience might mimic that investment strategy. Finfluencers start influencing a niche market, but eventually morph into large networks where they are able to influence investing decisions for vulnerable consumers. 

“Finally, we believe a blanket ban on all paid testimonials is urgently needed. There should be no paid testimonials or financial product reviews where the finfluencer receives a commercial benefit from the financial product or service being reviewed. They should only disclose the information if it is from personal experience and they are not paid for the testimony.”

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Wow, I must be naive. I had no idea these so-called finfluencers were pocketing commissions and getting paid for testimonials. ASIC and the current crop of nuffies controlling the Coalition are a disgrace. How dare they allow this corrupt behaviour to continue while are the same time, driving people away from properly licenced financial advice.

How can licensed advisers be receiving undisclosed commission for promoting investment platforms? Surely this is well and truly illegal under current laws? Why would extra rules be needed to prevent it?

One wonders if this is a real issue at all, or just another attempt by online product spruikers to deflect attention away from themselves and onto licensed professionals.

Ask Scott Pape how it's done.

What??…..The Barefaced Investor !!
He would never do anything wrong by anybody…he smiles a lot, wears relaxed clothes and is a favourite of the ABC ( who aren’t allowed to advertise of course….but are allowed to have people like Pape on regularly spouting how good he is at just
“ helping people”)
Yeah…well Daryl Dixon was a regular guest on Tony Delroy’s late night ABC Radio programme for years and Delroy couldn’t contain himself as to how Daryl was right about simply everything.
I don’t see ABC interviewing Dixon Advisory too much these days for great advice and tips !!

About time as legitimate advisers have Masters degrees and do ongoing accreditation. Fininfluencers use the general advice warning and make money selling books and doing sections in papers to legitimize their advice. No wonder consumers are confused. Time the media supported qualified advisers who are on the FAR and passed FASEA. More focus needs to be channeled to advise consumers if their adviser
is not on the FAR then do not go there. I am tired of being silent and the dodgy ones can exit and regulators have a very simple way to spot them as if they have not passed FASEA and on the FAR they should use their powers to remove them from the advice space.

There are times when they also use the "for entertainment purposes only" disclaimer.

Over regulation = emergence of Finfluencers

Yet another glaring example of how this current Govt has allowed dangerous & unregulated areas to flourish whilst discriminatorily penalizing good advisers who have valued, long term, caring relationships with clients who value the guidance and advice they receive.
This Govt should be utterly ashamed in the way it has pounded advisers into submission to have to work within an unworkable mountain of regulation and control processes.
It deserves nothing but contempt.

how does a licensed financial adviser receive a fee from a platform? And even if it can be done, how can it not be disclosed? That's what FOFA was all about.

Can’t wait for this to actually happen, and industry fund marketing and all those sprukers with term deposit equivalent which are risky AF.

And our wonderful minister for Finfluencers Ms Jane Hume does NOT want to regulate this online rubbish at all.
Ms Hume, Frydenberg & the LNP are happy to KILL Real Advisers with masses of duplicated BS over regulation to make Real Advice unaffordable for most.
At the same time push everyone to totally unregulated Finfluencers to fleece the masses.
Ms Hume, Frydenberg & the LNP need to be dethroned. What a disgusting bunch we need to get rid of.


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