ASIC Is Cracking Down Hard On Finance Influencers

The Australian Securities and Investment Commission (ASIC) has begun its crack down on unlicensed finance influencers, announcing that ‘finfluencers’ could face million-dollar fines and jail time for posts that breach Australian trading regulations.

Despite previous warnings from the regulator cautioning users from taking unlicensed advice, the niche of personal finance has rapidly become one of the most popular trends across TikTok and Instagram. The gamut of ‘finance Tikok’ ranges from innocent explainers of superannuation to personal testimonials of highly dubious crypto stocks likened to ‘pump and dump’ schemes.

The future for even the most innocuous ‘finfluncers’ has become uncertain after ASIC held an invite-only meeting last week with 30 popular Australian finance influencers. As reported by Australian Financial Review, ASIC’s stance ‘shocked’ influencers at the meeting, who were cautioned that taking even targeted advertising or sponsored posts constituted a breach of the law.

ASIC reportedly told the group that its definition of an “influencer” was a social media account with over one thousand followers, and that even “broad” discussions of financial products or shares could break the law.

Officials also warned that there would be no ‘grace period’ for offences, meaning that any posts that breached financial laws could be historically charged by ASIC.

Even Licensed Financial Advisers Say Social Media Is A “Tread Carefully” Space

James Wrigley posts financial content on TikTok and is a licensed financial advisor and principle at First Financial in Melbourne. Like other licensed financial advisors, he has noticed the rising trend of unlicensed influencers become popular on social media. While he says he hasn’t heard any “horror stories” yet, he understands ASIC’s concerns over the unaccountability of unlicensed influencers if their advice backfires.

“A lot of those accounts have tens of thousands of followers, so whatever they’re talking about is getting in front of the eyeballs of lots and lots of people,” Wrigley told Junkee. 

“I haven’t heard any horror stories just yet, but I’m sure they will come where some things that some people have been talking about, recommending particular investments or whatever it might be, they blow up, and then who do they go chasing for that unlicensed advice?”

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

“Some licensees were already pretty scared of their advisers putting things out on social media, it’s always been a “tread carefully” kind of space,” he told Junkee. 

Wrigley understands the popular appeal of  ‘finfluencing’ derides from traditional financial advice being expensive and “isn’t for everyone”. He says that providing accessible and free economic information on social media is a “feel-good” exercise for him.

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

“You can deliver that message on the likes of TikTok or Instagram, and (that way) someone’s not paying for advice, but they may not necessarily need advice. Maybe they just need to understand how the system works, and they can get that for free.”

Frustration From Content Creators Who Say Laws Should Apply To Everyone

While content creators are rushing to identify and remove content in breach of the new ASIC guidelines, some are angry about the lengths the regulator is going to punish those giving online financial advice despite the un-licensed advice still available in traditional forms of media.

Influencer Aleks Nikolic, who creates financial content as ‘Broke Girl Wealth’ on Instagram and TikTok, told the ABC that there’s a plethora of unlicensed financial advice that goes unscrutinised.

“It is a little odd that this spotlight has been placed on financial content creators when ostensibly books about investing, shareholders conferences, and even TV shows are giving far more prescriptive money advice and investment advice without a licence.” Ms Nikolic told the ABC.

Experts and influencers are additionally concerned, as the new ASIC guidelines don’t cover cryptocurrencies or property. This means that influencers can still create social media content recommending crypto without fear of persecution from the regulator.

The reason crypto is exempt from the new guidelines is that cryptocurrencies are currently an unregulated currency in Australia, which means ASIC can’t punish users who breach trading laws in the same vein as regulated financial products.

Despite the ACCC receiving a 50 percent increase in 2021 of reports concerning cryptocurrency scams, Nikolic told the ABC that the regulator’s stance on crypto is “absurd“.

“It really does mean that bank accounts, superannuation shares, and ETFs are all a higher risk class of content than talking about cryptocurrency,” said Nikolic.

Junkee has reached out to ASIC for comment.