The Australian Securities and Investments Commission (ASIC) has issued warning notices to 18 social media ‘finfluencers’ suspected of unlawfully promoting high-risk financial products and providing unlicensed financial advice to consumers.
The move comes as part of a joint global initiative to address the potentially harmful impact these social media sources can have on investors. To this end, ASIC has teamed up with regulators in the United Kingdom, United Arab Emirates, Italy, Hong Kong and Canada.
“It’s important that consumers separate fun from fact when it comes to finfluencer content. Popularity doesn’t equal credibility. Check their credentials and whether they’re licensed or authorised before checking your money out,” ASIC commissioner Alan Kirkland said.
The regulator’s current concerns involve finfluencer ‘trading experts’ who are promoting high-risk, complex investment products, such as contracts for difference and over-the-counter derivative products.
The regulator revealed since it issued “INFO Sheet 269 Discussing financial products and services online” in 2022, it had observed a drop in social media posts promoting financial products and services by unauthorised individuals.
It observed many finfluencers became licensed or authorised representatives or changed what they were saying after the release of this material.
However, a new trend of unlicensed finfluencers inviting consumers to join their closed communities or forums to learn their secrets to success or copy their trades has since emerged.
“Australia’s financial services laws protect investors and promote market integrity. They set minimum requirements and provide important protections for investors if something goes wrong,” Kirkland noted.
“If you spruik or discuss financial products and services online, you need to carefully consider how the law applies to you and seek legal advice if you are unsure.”
As well as the action ASIC has taken against the 18 individuals in Australia, the nine global regulators have used a combination of arrests, warning notices, website takedowns, educational schemes with authorised finfluencers and consumer awareness programs as part of the initiative.
