Financial Influencers and Financial Advice

The licensing provisions under the Corporations Act 2001 (the Act) apply to persons who provide financial product advice or arrange for a person to deal in a financial product when carrying on a financial services business. Carrying on an unlicensed financial services business is an offence under the Act, unless authorised as a representative of a licensee or relying on an exemption.

The Act imposes significant penalties, including up to five years’ imprisonment for an individual and financial penalties into the millions of dollars for a corporation.

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.

In 2020 and 2021, ASIC conducted two Young People and Money surveys to better understand the challenges young people are facing. The survey responses provide new insight into how young Australians learn about, engage with and feel about their finances.

ASIC has published an information sheet about discussing financial products and services online. It outlines 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.’

In 2021, the ASIC young people and money survey found that 33% of 18-21 year olds follow at least one financial influencer on social media. The survey found a further 64% of young people reported changing at least one of their financial behaviours as a result of following a financial influencer.

INFO 269 Discussing financial products and services online:

highlights activities where influencers may contravene the law if they are unaware of the legal requirements, using a series of practical examples on:
• financial product advice
• dealing by arranging
• misleading or deceptive conduct

explains issues for influencers to consider including:
• whether an AFS licence is needed
• being familiar with relevant regulatory guidance
• doing their due diligence on people who are paying them (including non-monetary benefits)

reminds AFS licensees who use influencers to:
• do their due diligence
• have appropriate risk management systems and monitoring processes
• have sufficient compliance resourcing to monitor the influencers they use
• consider their design and distribution obligations.

‘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,’ concluded Ms Armour.

This information sheet (INFO 269) is for social media influencers who discuss financial products and services online. It sets out how financial services laws apply to you – it is your responsibility to ensure that any content you post complies with the law.

INFO 269 is also for Australian financial services (AFS) licensees who use an influencer. You should be aware of your obligations as you may also be liable for any misconduct by the influencer.

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Fourth Line is a rigorous RegTech risk management and compliance system for advice practices, dealer groups and other wealth management participants. Fourth Line uses algorithmic approaches to simplify the complexity in advice reviews whilst maintaining human oversight, empowering compliance teams to coach and develop strong advice behaviors through data driven insights from advanced analytics for adviser, practice/dealer group and industry benchmark comparison with centralised document storage and access to meet regulatory needs. 

For information email: info@fourth-line.com.au