ASIC cracks down on unlawful “finfluencers” in global push against financial advice misconduct

Online investment advice searchers take note! The Australian Securities and Investments Commission (ASIC) has issued warning notices to 18 social media ‘finfluencers’ suspected of unlawfully promoting high-risk financial products and providing unlicensed financial advice to Australians as part of a Global Week of Action Against Unlawful “Finfluencers” by nine international market regulators.

ASIC and regulators from the United Kingdom, United Arab Emirates, Italy, Hong Kong and Canada took coordinated actions to crack down on unauthorised “finfluencers” or those posing as investment experts online.

Together, the nine regulators used a combination of regulatory and enforcement powers including arrests, warning notices, website takedowns, educational schemes with authorised “finfluencers” and consumer awareness programs to put unauthorised “finfluencers” on notice and warn consumers of the risks of unauthorised and misleading finfluencer content.

ASIC Commissioner Alan Kirkland said, “Regulators across the world have joined forces to disrupt unlawful finfluencer activity. It’s important that consumers separate fun from fact when it comes to finfluencer content,” he said. “Popularity doesn't equal credibility. Check their credentials and whether they’re licensed or authorised, before checking your money out."

Following the issuance of INFO Sheet 269 Discussing financial products and services online (INFO 269) in 2022, ASIC has observed a noticeable drop in social media posts spruiking financial products and services by unauthorised “finfluencers.”

“In Australia, after ASIC issued INFO 269, we saw that many ‘finfluencers’ changed what they were saying or became licensed or authorised representatives to comply with the law,” Kirkland said. “Australian Financial Services licensees who engage influencers also improved their due diligence and monitoring of ‘finfluencers’ to ensure they don’t provide unlicensed financial services and that consumers are not misled.”

ASIC’s current concerns lie with “finfluencers” positioning themselves as so-called "trading experts", who are providing unauthorised financial product advice and promoting high-risk, complex investment products that can cause real consumer harm, such as contracts for difference (CFDs) and over the counter (OTC) derivative products.

Their social media content is often accompanied by misleading or deceptive representations about the prospects of success from the products or trading strategies they promote, sharing images of lavish lifestyles, sportscars and other luxury goods.

“We are seeing a pattern where these unlicensed ‘finfluencers’ invite consumers to join their closed communities or forums to learn their secrets to success or copy their trades,” Kirkland said.

If a “finfluencer” is not licensed, an authorised representative or exempt, they’re legally not permitted to carry on a business of providing investment advice in Australia. Investors and consumers can check the credentials of “finfluencers” out by using ASIC’s professional registers search tool.

Recent Moneysmart research found that 41% of young Australians seek financial information or advice from online sources such as social media, including “finfluencers.”

“Australia’s financial services laws protect investors and promote market integrity. They set minimum requirements and provide important protections for investors if something goes wrong,” Kirkland said. “If you spruik or discuss financial products and services online, you need to carefully consider how the law applies to you and seek legal advice if you are unsure.”

ASIC conducts targeted monitoring of financial discussion by “finfluencers” that feature or promote financial products. Where we see harm occurring, we will take action to enforce the law.

Unlicensed investment advice activity can be reported to ASIC via their webpage or by calling 1300 300 630.