Australia’s financial regulator, the Australian Securities and Investments Commission (ASIC), is intensifying its efforts to tackle misleading financial advice disseminated by social media influencers, often referred to as “finfluencers”. The ASIC has begun issuing warning notices to four suspected influencers for providing unlicensed financial advice and potentially engaging in deceptive practices, including claims of “guaranteed returns”.
The regulator is assessing several financial services firms that have authorised these influencers, as part of a broader international initiative involving 17 regulatory bodies worldwide. Recent research indicates that a significant proportion of Gen Z Australians, aged 18 to 28, depend on social media for financial insights, with over half expressing trust in information from these influencers.
ASIC Commissioner Alan Kirkland emphasised the global nature of this problem, stating that unlawful finfluencer activities transcend borders, prompting coordinated actions from regulators for the second consecutive year. Kirkland noted that the online content consumers encounter is often influenced by algorithms prioritising engagement over factual accuracy, resulting in users being exposed to biased or misleading information.
The ASIC is particularly scrutinising finfluencers targeting Australian investors who discuss a variety of financial products, including leveraged derivatives and exchange-traded funds. Kirkland pointed out that finfluencers must possess an Australian Financial Services (AFS) licence or operate as authorised representatives in order to legally offer financial advice. He urged Australians to verify the credentials of influencers and critically evaluate the information presented before making financial decisions, especially when claims of “quick profits” or “certain returns” are made, as these could be infringements of the law.
Australia’s legal framework stipulates that unlicensed provision of financial advice can attract severe penalties, including up to five years in prison or fines reaching $1 million. Since 2022, unlicensed finfluencers have been able to work under the auspices of AFS licensees, although the responsibility for overseeing their activities remains with those licensees. ASIC expects these entities to have documented procedures for supervision as well as maintain records of their implementation.
Kirkland reiterated that licensees are accountable for the actions and statements made by their representatives online and called for active supervision rather than a passive oversight approach.
Individuals suspecting any unlicensed finfluencer activity can report it to ASIC online or by calling 1300 300 630. This concerted effort reflects a growing recognition of the need for stringent oversight in the evolving landscape of financial advice, particularly in the era of social media.