ASIC has issued a warning to financial social media influencers, and the licensees who use them, that the influencers must comply with financial services laws.
The regulator has published an information sheet about discussing financial products and services online. It includes a reminder to AFS licensees who use influencers to:
- Conduct 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 Commissioner Cathie Armour says in a statement that that the way investors access information is changing and it’s “…crucial that influencers who discuss financial products and services online comply with the financial services laws.”
She says if they don’t “..they risk substantial penalties and put investors at risk.”
ASIC’s information sheet also 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
It also 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)
Armour says that 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.”
The ASIC statement also notes that in 2021, the ASIC young people and money survey found that 33 percent of 18-21 year-olds follow at least one financial influencer on social media.
It also found a further 64 percent of young people reported changing at least one of their financial behaviours as a result of following a financial influencer.
