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.
Both addressed finfluencers in their opening statements to the Association of Financial Advisers (AFA) conference today and Hume said it was not up to the government or the industry to bail people out who made financial decisions that went “drastically wrong” based on the musings of a taxi driver, the man down the pub, or a 16-year-old on TikTok.
“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.
“I believe in personal responsibility and common sense. But for that to work, we must make sure that consumers have access to the information that they need to make informed decisions.
“Consumers must have the information to know that the influencer is not an accredited adviser, and do not assume that they will act in their best interest and give them unconflicted advice.”
Hume said when people appropriated the brand of being a financial adviser, without having done any due diligence or having the same obligations, it undermined the adviser brand.
“That's why we need an up-to-date financial advisers register that consumers can access. It's also why one of ASIC’s [the Australian Securities and Investments Commission’s] most important enforcement tasks is preventing unauthorised advisers from claiming to be advisers,” Hume said.
“The threat is not from people who may incidentally or accidentally veer into financial advice territory on their social media. The threat is from people who are fraudulent, who claim to be trusted advisers, but are not. The threat to the advice industry to the consumer is for people who lie and deceive in order to get consumers to trust them, and in doing so undermine the trust of the entire industry.
“You should all hold your financial adviser standards, your registration, and your authorisation up like a badge of honour because consumers know that they can trust you that you have the knowledge and that you had the experience to do best by them.”
Hume noted she did not want to prevent people from being interested in finance, or from expressing their views or engaging with others and learning.
“But of course, that isn't a free pass to scam people or to engage in misleading or deceptive or dishonest behaviour. There's never an excuse for that. But the existence of a small number of unscrupulous active doesn't justify wholesale constraints and policing a freedom of expression for everyone,” she said.
“Personal responsibility and freedom to make your own choices are hallmark of a liberal democracy. But we do need places that people can turn to away from the noise that they know will provide them with good quality, accredited advice. So, I want to send a message out loud and clear. If you want advice, authorised registered financial planners are a service that you can trust.”
ASIC chair, Longo, gave an example of a couple who wanted access to affordable personal advice but did not know how to assess the quality of advice offered.
“Here comes the plot twist. They may have gone online and sought to educate themselves via a financial influencer or ‘finfluencer’,” Longo said.
“ASIC is aware of the fact that the pandemic has created the perfect conditions for finfluencers to flourish. The result is the conflation of general and personal advice, which is now in a state of flux.
“We are watching this evolution closely. We are making it clear to social media content creators and the public that there is a clear legal difference between advice and opinion.
“And we are working to enable industry to counterbalance opinion with professional, good-quality advice that is also affordable.”