Australian regulator warns social media influencers over financial advice
The Australian markets regulator has warned social media influencers to follow the rules around discussing financial topics amid a surge in retail investment.
The Australian Securities and Investments Commission (ASIC) has released an information sheet providing examples of what types of comments may be considered financial product advice, dealing by arranging or misleading.
In addition, the regulator has reminded Australian financial services licensees that they may be responsible for any misconduct by influencers they choose to work with.
‘The way investors access information is changing. It is crucial that influencers who discuss financial products and services online comply with the financial services laws,’ says ASIC commissioner Cathie Armour in a statement. ‘If they don’t, they risk substantial penalties and put investors at risk.’
Retail investment has surged over the last two years with millions of new brokerage accounts set up around the world. As a result, a growing number of social media influencers have begun to discuss financial topics on platforms like Twitter, TikTok, Instagram and Snapchat.
Last year, ASIC conducted a survey to investigate the growing trend of retail investment. It found two thirds of young people said they had changed at least one of their financial habits due to an influencer.
The ASIC information sheet explains to influencers when an Australian finance services license is needed, how to be familiar with regulatory advice on financial products and the importance of investigating people who are hiring them to discuss financial issues.
‘ASIC monitors select online financial discussion by influencers who feature or promote financial products for misleading or deceptive representations or unlicensed advice or dealing,’ adds Armour in the statement. ‘If we see harm occurring, we will take action to enforce the law.’
Companies and their IR teams have been exploring ways to meet the increased demand for information from retail holders. Some have turned to technology to help get their message across, incorporating social media platforms and apps into their earnings process.