Finfluencers have been warned that they must comply with financial services laws or risk “substantial penalties”, and they should think carefully about their content.
ASIC has issued an information sheet, setting out its expectations for social media influencers discussing financial products and services,
A survey the regulator conducted last year found that 33 per cent of 18 to 21 year-olds follow at least one financial influencer on social media and 64 per cent reported changing at least one of their financial behaviours as a result of following a finfluencer.
The information sheet (INFO 269) says information presented in a way that conveys a recommendation would be considered financial product advice, in which case the finfluencer would need an Australian financial services licence.
A social media post saying something like “I’m going to share with you five long-term stocks that will do well and which you should buy and hold” would likely be considered financial product advice.
Any misleading content would be a breach of the law. In this context a misleading statement is one that cannot be substantiated.
Opinions such as “ETFs will make you a positive guaranteed return” is likely to be considered financial product advice and also likely to be considered misleading.
Being paid to promote links to sites offering financial products or services is likely to be considered dealing by arranging.
ASIC recommends that finfluencers do their due diligence on any businesses that are paying them (including non-monetary benefits).
The regulator has recommended that consumers who suspect unlicensed activity report it.