Influencers in Australia risk jail for breaking finance tips rules
Influencers in Australia face up to five years in jail if they break laws on financial advice, a new information sheet warns.
The Australian Securities and Investments Commission (ASIC) says they may need a licence to give such advice.
A 2021 ASIC survey suggested 33% of 18 to 21-year-olds follow financial influencers.
And it also found that 64% of young people in Australia changed a financial behaviour because of an influencer.
ASIC commissioner Cathie Armour said it was 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”.
Aleks Nikolic, who dislikes the label influencer, but posts about financial investment on Instagram, TikTok and Twitter, told the Guardian the information sheet was useful.
“I think it’s some of their clearest and best comms they’ve ever put out, potentially ever,” she told the paper.
“Obviously everyone will now madly scramble to become compliant, but that was the point.”
The information sheet also gave a number of examples of statements that could constitute financial advice.
For example, ‘I’m going to share with you five long-term stocks that will do well and which you should buy and hold”, was probably financial product advice, ASIC said.
But “you can save money each week by preparing your own home-cooked lunches for work, instead of eating out”, was just a budgeting tip and unlikely to be financial product advice.
The information sheet also warns that making misleading or deceptive remarks about financial products could also break the law.
And it points out that sharing affiliate links which send followers to online brokers could be offering a financial service and might require a licence.
In February, the UK Financial Conduct Authority (FCA) urged caution over the use of influencers in the marketing of financial products.
“Retail investments’ use of social media influencers on various platforms to market investments is becoming a concern for us,” the financial watchdog said.
“Firms should ensure they have taken appropriate legal advice to understand their responsibilities prior to using influencers.”
And there has been particular concern about the use of influencers in cryptocurrency marketing.
In the past, FCA chairman Charles Randell has accused influencers who promote cryptocurrency of fuelling “delusions of quick riches”.
In January, proposed new laws were announced by the UK Treasury to deal with misleading crypto-asset promotions.
The laws would make “qualifying crypto-assets” subject to the same rules as other financial promotions, such as for stocks, shares, and insurance products.
The FCA also launched a consultation on “a significant strengthening of its rules on how high-risk financial products are marketed”.
In the same month, Spain’s National Securities Market Commission also revealed plans for new rules for advertising crypto-assets, including promotions by social media influencers.