ASIC cracks down hard on finance influencers

The Australian Securities and Investment Commission (ASIC) has begun its crackdown on unlicensed financial influencers, announcing that ‘influencers’ could face million dollar fines and jail time for posts that violate Australian trade regulations.

Despite previous warnings from the regulator warning users against unauthorized advice, the personal finance niche has quickly become one of the most popular trends on TikTok and Instagram. The range of “Tikok finance” ranges from innocent superannuation explainers to personal testimonials of highly dubious crypto stocks equated with “pump and dump” schemes.

The future for even the most innocuous “finfluncers” has become uncertain after ASIC hosted an invitation-only meeting last week with 30 popular Australian financial influencers. As reported by Australian Financial Review, ASIC’s stance “shocked” influencers at the meeting, who were warned that even taking targeted ads or sponsored posts was a violation of the law.

ASIC reportedly told the group that its definition of an “influencer” is a social media account with more than a thousand followers, and that even “broad” discussions of financial products or stocks could violate the law.

Officials also warned that there would be no “grace period” for breaches, meaning any position that violates financial laws could be historically charged by ASIC.

Even licensed financial advisers say social media is a space ‘to be followed with caution’

James Wrigley posts financial content on TikTok and is a Chartered and Principle Financial Advisor at First Financial in Melbourne. Like other licensed financial advisers, he has noticed the growing trend of unlicensed influencers becoming popular on social media. Although he says he hasn’t heard any “horror stories” yet, he understands ASIC’s concerns about the irresponsibility of unlicensed influencers if their advice backfires.

“A lot of these accounts have tens of thousands of followers, so whatever they’re talking about is in front of many, many people’s eyes,” Wrigley told Junkee.

“I haven’t heard any horror stories yet, but I’m sure they will come where certain things that certain people have been talking about, recommending particular investments or whatever, blow up, and then who do they go to for this unauthorized advice?”

Wrigley has been posting content on TikTok for over a year and says creating social media content as a licensed professional has always been difficult.

Some licensees were already scared enough of their advisors posting on social media, it’s always been a ‘be careful’ type space,” he told Junkee.

Wrigley understands that the popular appeal of “finfluencing” mocks the fact that traditional financial advice is expensive and “not for everyone.” He says that providing accessible and free business information on social media is an exercise in “feel good” for him.

“Where most people think they need to talk to a financial adviser, it’s not really financial advice they need: it’s just some basic financial advice, like superannuation 101 “, did he declare.

You can forward this message on TikTok or Instagram, and (that way) someone doesn’t pay for advice, but they don’t necessarily need advice. Maybe they just need to understand how the system works, and they can get it for free.

Frustration of content creators who say the laws should apply to everyone

As content creators rush to identify and remove content in violation of new ASIC guidelines, some are unhappy with how long the regulator will punish those who give financial advice online despite the unauthorized advice still available in traditional forms of media.

Influencer Aleks Nikolic, who creates financial content under the name “Broke Girl Wealth” on Instagram and TikTok, told the ABC that there is a plethora of unqualified financial advice that is not reviewed.

“It’s a bit odd that this spotlight has been put on financial content creators when seemingly investing books, shareholder conferences and even TV shows give much more prescriptive financial advice and unlicensed investment advice.” Ms Nikolic told the ABC.

Experts and influencers are also concerned, as the new ASIC guidelines do not cover cryptocurrencies or ownership. This means that influencers can still create social media content recommending crypto without fear of being persecuted by the regulator.

The reason crypto is exempt from the new guidelines is that cryptocurrencies are currently an unregulated currency in Australia, which means ASIC cannot punish users who break trading laws in the same way as traders. regulated financial products.

Although the ACCC received a 50% increase in 2021 in reports of cryptocurrency scams, Nikolic told the ABC that the regulator’s stance on crypto is “absurd”.

“It really means that bank accounts, retirement stocks and ETFs are all a higher risk class of content than talking about cryptocurrency,” Nikolic said.

Junkee has reached out to ASIC for comment.