- ASIC is calling for Australians to report influencers offering ‘financial product advice’ on their platforms.
- The statements come as the finance influencer space grows in Australia, highlighting potential risks around regulating investing content on social media.
- Examples of Australian influencers skirting ASIC rules expose potential blind spots in its current regulations.
- Visit Business Insider Australia’s homepage for more stories.
As finance-focused content on social media explodes, the Australian Securities and Investments Commission (ASIC) has said it wants to know about ‘finfluencers’ straying into formal financial advice without a licence.
At a joint parliamentary committee hearing on Friday, ASIC chairman Joe Longo said in answer to a question around “social media influencers giving financial advice” that this was a “big subject” and an “area of big concern” for the agency.
The statement suggests the agency will continue its hardline stance on monitoring and potentially prosecuting unlicensed online advice, as well as exposing the potential limits of its current regulatory framework.
Danielle Press, ASIC Commissioner, told the committee that unlicensed advice was one of the topics the regulator was looking at “very closely and considering.”
Press said the behaviour would come under ASIC’s purview if the individual in question was technically providing financial advice, meaning they actually recommended a financial product.
“If it is advice and is unlicensed, that is an illegal activity,” Press said.
“We would be very interested in that activity. If there is evidence of unlicensed advice being given, we would very much appreciate it being referred to us so we can look at it appropriately because it is illegal activity.”
When asked whether ASIC was on the lookout for financial influencers accepting “kickbacks” or commissions, Press said it would be a “key issue” – but only for organisations providing financial advice as a business.
Growing evidence influencers are promoting cryptocurrency for personal profit
In early June, Business Insider Australia reported that Australian TikTok influencer, Atis Paul, was using his platform to promote a specific crypto token, Hushcoin, to his followers across TikTok, Instagram and OnlyFans, potentially in violation of ASIC rules.
ASIC recommends that an Australian Financial Services (AFS) licence is required if you provide financial product advice to clients, and Paul has a subscriber based income stream from locked OnlyFans content that promises “daily updates on the coins I have recommended.”
While Paul’s platforms carry the disclaimer that his content is simply “opinion and entertainment,” with his OnlyFans landing page — where he charges monthly fees for users to access content that includes advice about crypto — states that the content “is not financial advice and should not be taken as financial advice,” several social posts suggest otherwise.
In an Instagram post from June 5, Paul shared a story with a testimonial from a follower, which read “Bro ive made $11k from the coins you’ve posted.”
Journalists Kate, Amy and Sophie Taeuber, who first broke the story on their podcast Outspoken, suggested Paul was “heavily profiting from [his] followers buying this coin.”
Paul’s online activity, along with others in the space, calls into question the government’s current hands-off stance on influencer financial advice, as creating content on social media around investing becomes an increasingly popular activity
ASIC statement counters the government’s hands-off stance
Statements by Financial Services Minister Jane Hume last month appear to counter those of ASIC and downplay the risks of influencers engaging in financial product advice.
Speaking at an industry conference, she suggested online stock tips and investment advice was “inevitable” and not part of the problem.
Hume suggested that a “TikTok influencer spruiking Nokia” shared the same level of influence as “the bloke down at the pub” sharing investment tips.
RMIT senior lecturer of finance Angel Zhong told Business Insider Australia that many social media influencers generate income off their content– a factor that means their motives differ from other non-experts offering generalised advice.
“Investment advice provided on social media tends to encourage day trading, promote get-rich-quick schemes and FOMO (fear-of-missing-out),” Zhong said.
She said the rise in investing content “highlights the importance of considering having explicit measures in place to warn vulnerable viewers about the reliability of financial advice in social media,” she said.
Hume’s comments come amid evidence Gen Z and millennials are increasingly paying for professional advice from financial planners as well as online sources, even as fees across the industry jump by 30%.
Analysis of trading data by the Australian Investment Exchange (AUSIEX) found the number of Gen Z investors seeking out professional advice from financial planners or stockbrokers has tripled, and the number of millennial clients has doubled.
The analysis found Gen Z accounts opened by financial advisers tripled over the past two years, up from 3.8% in November to 8.4% as of March 2021.