The Australian Securities and Investments Commission (ASIC) has published an Information Sheet (INFO 269) warning social media influencers of their potential breach of the Corporations Act 2001 (Cth).
INFO 269 is targeted at online personalities who promote or sell financial products and services to their audience. ASIC has been investigating these “finfluencers” since mid-2021 due to three areas of concern for consumers:
- Whether finfluencers are licenced to provide financial services?
- Whether fincluencers make misleading or deceptive statements online?
- Whether there is any market manipulation or interference by these finfluencers (for example, pump and dump tactics)?
For example, many influencers promote the purchasing of Exchange Traded Funds, or ETFs, which are generally thought of as “guaranteed ways to make a positive return” in the stock market. Although, this opinion by the finfluencer cannot guarantee a positive return, particularly in situations of black swan events such as the outbreak of the COVID-19 pandemic. As such, ASIC views this as misleading and may penalise a finfluencer for this. Interestingly, INFO 269 does not introduce any new laws. Instead, it is designed to act as a warning to social media users and content creators about the penalties they may face for improperly promoting financial services.
To provide any financial service, an individual must hold an Australian Financial Services Licence or be an authorised representative of an ASFL holder. This licence must be disclosed when making content online to prevent undue influence and confusion. Although, ASIC has noted that merely stating that you are not a financial advisor is not sufficient to avoid breach of the law.
Exceptions to misleading or deceptive conduct is whether the information is general advice and available in the public domain. This definition is quite loose, and it is still difficult to discern what is general advice in a financial setting.
As of INFO 269, finfluencers must be aware of how their content will be perceived by both users and ASIC. ASIC has noted that its investigating division will screen a variety of content on TikTok, Instagram, and similar platforms, for financial spruiking. Any finfluencers found to breach INFO 269 will be subject to severe fines and may even face imprisonment.
For the full reading of the ASIC Information Sheet, see here.
