The Australian Securities and Investments Commission has today published information on financial products and services online discussing how the law applies to social media influencers, and the licensees who use them.
ASIC Commissioner Cathie Armour said:
The way investors access information is changing. It is crucial that influencers who discuss financial products and services online comply with the financial services laws. If they don’t, they risk substantial penalties and put investors at risk.
ASIC young people and money survey conducted in 2021 discovered that one third of young people between 18 and 21 follow at least one financial influencer on social media. The research further found that 64% of young people reported changing at least one of their financial behaviours as a result of following a financial influencer.
The information sheet ASIC published highlights the activities where influencers can breach the legal requirements if they are unaware including financial product advice, dealing by arranging and misleading or deceptive conduct.
The regulator has also explained issues influencers may consider such as whether an AFS licence is needed, getting familiar with relevant regulatory guidance and doing their due diligence on people who are paying them. ASIC also suggested that influencers may consider having appropriate risk management systems and monitoring processes.
Armour added:
ASIC monitors select online financial discussion by influencers who feature or promote financial products for misleading or deceptive representations or unlicensed advice or dealing. If we see harm occurring, we will take action to enforce the law.
Australia’s Corporations Act 2001 generally applies to people who provide financial product advice or arrange for a investors to deal in a financial product when carrying on a financial services business. Conducting such business without the proper authorisation and licence may lead to significant penalties, including up to five years’ imprisonment.
ASIC highlighted:
The law also prohibits conduct that is misleading or deceptive, or is likely to mislead or deceive, in relation to financial products or services. An influencer does not need to be licensed to breach the misleading or deceptive provisions.
Last year, the Aussie watchdog announced ban on unsolicited retail sale of financial products.
