Key points
  • ASIC has issued warning notices to four finfluencers suspected of giving unlicensed financial advice.
  • The regulator is also reviewing AFS licensees overseeing 15 finfluencers as part of a global enforcement push.
  • Australians are urged to check credentials and sense-check financial claims seen online. 

The Australian Securities and Investments Commission (ASIC) on Friday confirmed it has issued formal warning notices to four unlicensed ‘finfluencers’ (financial influencers) suspected of engaging in “misleading” or “deceptive” conduct. 

Finfluencers is generally a catch-all term for anyone discussing money on social media platforms. 

ASIC said the four finfluencers had been suspected of giving unlicensed financial advice, including promoting claims of guaranteed returns. 

“If someone on social media is promising easy money or guaranteed returns, there is a real risk they’re breaking the law, and you could be the one who loses money,” ASIC commissioner Alan Kirkland said. 

ASIC concerned about unauthorised financial advice

It's not uncommon for finfluencers to share personal financial success stories to capture attention. 

However, ASIC says it becomes a problem when content crosses the line into telling people what financial products they should buy, sell, or trade, without the influencer being properly licensed or authorised. 

“ASIC is concerned that you may be contravening Australian financial services laws by carrying on a financial services business in Australia without being authorised to do so,” the warning letter sent to the influencer read.

“It is your responsibility to be aware of and comply with your obligations.” 

The corporate regulator did not name those who were sent the letter.

According to ASIC, finfluencers must either hold an Australian Financial Services (AFS) licence or operate as an authorised representative to legally provide financial product advice. 

ASIC has also commenced a review of several AFS licencees supervising 15 finfluencers in a bid to “disrupt” unlawful online promotion. 

ASIC’s surveillance focused on finfluencers targeting Australian investors and discussing a range of financial products, including leveraged derivatives, shares, and exchange-traded funds (ETFs).

See also: Australian Investment Statistics

Social media replacing traditional money advice

The crackdown comes as research shows the growing influence of social media on financial decision making in the country. 

Recent ASIC Moneysmart research reveals the majority (63%) of Gen Z Australians rely on social media for financial information, and more than half say they trust advice from finfluencers.

Meanwhile, 64% say they trust the financial information on AI platforms. 

ASIC notes young Australians are putting “high levels of trust” in unreliable sources, which could lead to “riskier financial decisions” such as investing in cryptocurrencies. 

Almost three-quarters (72%) of Gen Z Aussies say they have seen social media advertising for crypto assets in the past 12 months. 

But the watchdog says social media algorithms are designed to reward engagement rather than accuracy. 

“This means consumers are more exposed to biased or misleading content,” Mr Kirkland said. 

Watchdog says double-check what you see online

ASIC encourages Australians to check whether someone is licensed or authorised using its professional registers tool before acting on financial advice they see while scrolling through social media. 

Unlicensed or unauthorised social media influencers offering financial advice in Australia could face up to five years’ imprisonment or million-dollar fines.  

“We urge Australians to check a creator’s credentials and sense-check the information,” Mr Kirkland said. 

Licensees reminded of their obligations

ASIC’s review of several licensees aims to assess whether they are actively supervising finfluencers, rather than adopting a “set and forget” approach. 

It is the first time since guidance on online financial content was released in 2022 that ASIC has directly reminded licensees of their oversight obligations. 

Unlicensed finfluencers are allowed to operate as authorised representatives under an AFS licensee, which remains “responsible” and “liable” for what the influencers say online. 

ASIC confirms it will continue monitoring social media activity and may take enforcement action where finfluencer conduct or licensee failures place Australian consumers at risk. 

ASIC has previously taken action against licensees who have failed to maintain their licensing supervisory arrangements.  

In February this year, the corporate regulator cancelled the AFS licence of Pulse Markets for failing to take reasonable steps to ensure its representatives comply with financial services laws.

The ongoing crackdown is part of the second Global Week of Action Against Unlawful Finfluencers. 

ASIC and 16 other regulators across Asia, Europe, North America, South America, and the Middle East are cracking down on unlawful online financial promotion.