ASIC releases rules for finfluencers
The Australian Securities and Investments Commission (ASIC) has released information outlining what’s expected from finance influencers (finfluencers) in order to comply with financial services laws and regulations.
How influential are finfluencers?
The Australian Securities and Investments Commission (ASIC) has had its eye on finfluencers over the past year. According to a 2021 ASIC survey, 28 per cent of 18-21 year olds follow at least one finfluencer on social media, while a further 64 per cent of young people reported changing at least one of their financial behaviours as a result of following a finfluencer.
More recently, the AFR reported that a recent survey from Global Prime and The Digital Edge Research Company found that 7.3 per cent of Australians surveyed chose “what’s trending on social media or the internet” as one of their three biggest priorities when choosing which stocks or assets to invest in, with 2 per cent putting it as their number one priority, ahead of the cost and risk of investments and the advice of family, friends, and finance professionals.
Men were found to be four times more likely to prioritise advice from social media and internet sources (including Reddit, TikTok, Discord and 4chan) than women, while Millennial and Gen Z respondents were found to be twice as likely to choose the option than Baby Boomers.
According to ASIC, with many finfluencers not holding an Australian Financial Services (AFR) license, finfluencer followers could be affected by conflicts of interest and other misconduct.
Speaking at the AFA Hybrid Conference in September 2021, ASIC chair, Joseph Longo, said that with finfluencers flourishing in part as a result of the pandemic, general and personal financial advice is being conflated:
“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.”
What are the rules for finfluencers?
According to ASIC’s information sheet, the main legal obligations for finfluencers are:
- Avoid providing financial product advice or arranging for your followers to deal in a financial product if you don’t hold an AFS license
- Make sure your content is accurate and balanced, and not misleading or deceptive
For example, while finfluencers are able to share factual information about financial products without giving financial product advice, if they share recommendations or opinions that could influence a person’s decisions in relation to financial products without a license, they could be in breach.
Finfluencers are also expected to do their due diligence on any paid work or sponsorships, which may need to be disclosed to followers.
This is a general summary only – consider contacting a legal professional for more details of what’s expected from a finfluencer.
What can everyday Australians do?
Australians who rely on finfluencers may also want to do their due diligence when looking for general advice on investments and other financial decisions, and consider double-checking their sources before making any financial decisions.
For personal advice that takes your own financial situation into account, it may be worth getting in touch with a licensed professional, such as a financial adviser or a mortgage broker.