The Financial Planning Association of Australia (FPA) has welcomed the Australian Securities and Investments Commission’s (ASIC) clamping down on the use of finfluencers.
FPA chief executive, Sarah Abood, said it was encouraging to see ASIC providing clear guidance on what was legally allowed when discussing financial products and services online.
“ASIC is reminding finfluencers that the law does apply to them and warning them that ASIC will take legal action if necessary.”
Abood said the FPA had long been concerned about an apparent ‘two tier’ approach to the regulation of financial advice, where social influencers operating online seemed to be treated differently to financial planners.
“Financial planners are subject to a high degree of oversight and regulation, and consumers can have confidence in the advice they receive from a professionally qualified and registered financial planner. None of these protections apply where finfluencers are concerned,” Abood said.
The FPA agreed finfluencers could play a role in improving financial literacy and confidence among consumers, and they were often effective at providing information in an engaging way.
“However, they are not legally able to give personal or general advice on financial products, and anyone acting on a recommendation from this source is essentially on their own if things go wrong,” Abood said.
Abood also flagged the risk financial influencers posed to consumers in relation to unregulated products such as cryptocurrency.
“Australians should only act on the advice of qualified, professional financial planners who are complying with a code of ethics to provide advice in your best interests, where there are consumer protections, regulators are supervising them and they are providing support and assistance for clients.”