Invest
ASIC announces review of select ‘finfluencers’
ASIC is undertaking a review of a select few “finfluencers” to understand how the financial services law applies to their activity.
ASIC announces review of select ‘finfluencers’
ASIC is undertaking a review of a select few “finfluencers” to understand how the financial services law applies to their activity.
Responding to a question on notice to the standing committee on economics, ASIC confirmed that having observed increased discussion about finance and investment on social media sites, the regulator is undertaking a review of selected financial influencers.
It is also engaging with social media platforms and their moderators to ascertain whether the regulator’s RG 162 Internet Discussion Sites requires updating.
“Our selection of finfluencers is not targeted specifically at TikTok, although it is being included in the review, as we note that some of the finfluencers have a presence on TikTok,” ASIC said.
According to the regulator’s research to date, the number of online finfluencers across platforms such as Facebook, Reddit, Instagram, YouTube and TikTok is clearly growing.
“Increased levels of retail investor participation and interest in investment is to be encouraged, but we want this to occur in an informed, safe and sustainable way. This contributes to market integrity and confidence for all investors,” the corporate regulator said.
It expressed particular concern for younger and first-time investors who are accessing information from online finfluencers, some of whom are being paid to propagate particular agendas.
“As most finfluencers do not hold an AFS licence, they are not subject to the requirements that apply to licenses, including having adequate arrangements to manage conflicts of interest or to provide financial services efficiently, honestly and fairly,” ASIC said.
“We are concerned that inexperienced investors may be increasingly acting on financial advice from unlicensed providers. This may result in conflicted or poor advice being provided to users who may suffer financial loss.”
But ASIC is not only targeting finfluencers for want of a better understanding of this new advice niche, and is said to be engaging in consultations with AFS licensees who are paying these individuals to promote their products.
This, however, is not the first time ASIC has spoken about the proliferation of amateur investment advice on social media. In fact, judging by previous remarks, it appears the regulator has been fairly slow in ascertaining its responsibilities when it comes to this new form of advice.
In a statement released in November 2020, ASIC noted: “Since March 2020, ASIC has seen a significant escalation in complaints about unlicensed conduct, including complaints about unlicensed financial advice being provided through websites, social media, cold-calling and seminars.
“ASIC is concerned because consumers unknowingly receiving unlicensed advice do not have the same protections afforded to them under the law when they receive advice from licensed providers.”
But ASIC’s apparent lack of urgency is not too surprising given the government’s own financial services minister Jane Hume had previously played down the potential of social media influencers to dispense financial advice.
“The TikTok influencer spruiking Nokia is not that different to the bloke down at the pub who wants to tell you all about the really great company he just invested in — but with a much louder voice,” she said.
“This isn’t financial advice, but as has been the case since taxi drivers started giving stock tips, it is an inevitable part of a financial ecosystem.”
Ms Hume’s comments don’t sit well with experts.
A senior lecturer in finance at the School of Economics, Finance and Marketing at RMIT University, Dr Angel Zhong, told ifa’s sister brand, nestegg, that “the bloke at the pub does not make profits from telling you about the great company he just invested in”.
“On the contrary, social media influencers generate income based on the views of their contents. As such, their motives are different,” Dr Zhong said at the time.
To Dr Zhong, there’s no grey area. Through platforms like TikTok, YouTube, Facebook, Reddit and ASXbets, finance influencers are providing unmoderated investment advice without a licence.
About the author
About the author
Advice
Macquarie responds to ASIC's Federal Court proceedings
The bank has responded to civil penalty proceedings commenced by ASIC. ...Read more
Advice
Macquarie Bank taken to court by ASIC
The corporate regulator has taken action against the bank. ...Read more
Advice
ASIC's finfluencer warning a 'wake-up call'
The corporate regulator has published an information sheet on how the law applies to social media influencers or “finfluencers” and licensees who use them. ...Read more
Advice
Compensation scheme fails to protect Aussie investors
The FPA is concerned the government’s proposed CSLR model won’t provide adequate protection for Australian investors. ...Read more
Advice
ASIC says it’s ‘emotionally inappropriate’ to apologise to victims of Sterling collapse
The corporate regulator has conceded that it could have acted differently in response to concerns with the Sterling Group but has refused to apologise for the matter. ...Read more
Advice
Corporate regulator defends decision to not act earlier on Sterling collapse
The corporate regulator said it did not believe there was any “particular concern” to act on complaints regarding the Sterling Income Trust when it was first brought to its attention. ...Read more
Advice
‘Policing TikTok advice would inhibit innovation’
Jane Hume is adamant that curtailing finfluencers via legislation would be equivalent to creating a nanny state with “unworkable” rail guards that inhibit progress and innovation. ...Read more
Advice
Introducing nestegg’s new-look team
Momentum Media has bolstered its wealth portfolio, unveiling an expanded content team and adding a consumer brand that delivers Australians essential information to prepare for a successful financial ...Read more
Wrapping up an eventful 2021
Listen now
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
Advice
Macquarie responds to ASIC's Federal Court proceedings
The bank has responded to civil penalty proceedings commenced by ASIC. ...Read more
Advice
Macquarie Bank taken to court by ASIC
The corporate regulator has taken action against the bank. ...Read more
Advice
ASIC's finfluencer warning a 'wake-up call'
The corporate regulator has published an information sheet on how the law applies to social media influencers or “finfluencers” and licensees who use them. ...Read more
Advice
Compensation scheme fails to protect Aussie investors
The FPA is concerned the government’s proposed CSLR model won’t provide adequate protection for Australian investors. ...Read more
Advice
ASIC says it’s ‘emotionally inappropriate’ to apologise to victims of Sterling collapse
The corporate regulator has conceded that it could have acted differently in response to concerns with the Sterling Group but has refused to apologise for the matter. ...Read more
Advice
Corporate regulator defends decision to not act earlier on Sterling collapse
The corporate regulator said it did not believe there was any “particular concern” to act on complaints regarding the Sterling Income Trust when it was first brought to its attention. ...Read more
Advice
‘Policing TikTok advice would inhibit innovation’
Jane Hume is adamant that curtailing finfluencers via legislation would be equivalent to creating a nanny state with “unworkable” rail guards that inhibit progress and innovation. ...Read more
Advice
Introducing nestegg’s new-look team
Momentum Media has bolstered its wealth portfolio, unveiling an expanded content team and adding a consumer brand that delivers Australians essential information to prepare for a successful financial ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
