ASIC reviews AFSLs over finfluencer concerns

ASIC has issued warning notices to four finfluencers suspected of providing unlicensed financial advice or engaging in misleading or deceptive conduct, as well as commencing a review of several licensees and their supervision of 15 finfluencers operating under their licences.

This comes as ASIC continues working alongside 16 global regulators as part of its crackdown on unlawful social media finfluencers amid growing concerns about the influence of financial information online, particularly among younger Australians.

ASIC said the action is intended to disrupt unlawful finfluencer online promotion before consumers suffer financial harm.

The warning notices to the four finfluencers relate to the suspected provision of unlicensed financial advice, including promoting claims of guaranteed returns, which may also be misleading or deceptive.

ASIC's action formed part of the second Global Week of Action Against Unlawful Finfluencers, involving 17 regulators globally, including ASIC, across Asia, Europe, North America, South America and the Middle East to disrupt unlawful online financial promotion and warn consumers about misinformation.

The regulator said the continued crackdown reflects its concern about the growing influence of social media on financial decision making.

"Unlawful finfluencer activity doesn't respect borders, which is why regulators are taking strong action together for a second year in a row," ASIC commissioner Alan Kirkland said.

"What people see online is shaped by algorithms designed to drive clicks and engagement, rather than promoting accurate information. This means consumers are more exposed to biased or misleading content."

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

"Finfluencers must either hold an AFS licence or operate as an authorised representative to legally provide financial product advice or arrange for their followers to deal in financial products," Kirkland said.

"When viewing financial content on social media, we urge Australians to check a creator's credentials, and sense-check the information before acting on it.

"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 is also reminding licensees about their supervisory obligations when engaging finfluencers.

Under the arrangements, unlicensed finfluencers may operate as authorised representatives of AFS licensees, however responsibility for supervising finfluencer conduct and the liability for any breaches remains with the licensee.

As part of this, ASIC said it has contacted and met with three licensees to review their supervision of 15 finfluencers operating as authorised representatives and reminding them of their legal supervisory obligations.

ASIC expects licensees that authorise finfluencers to have adequate, documented arrangements in place to actively supervise their conduct, and to maintain records of that supervision.

"Licensees remain responsible and liable for what their representatives say and do online," Kirkland said.

"We expect active supervision, not a set-and-forget approach."

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

"If a social media influencer isn't licensed or authorised, they cannot offer financial advice in Australia and could face up to five years' imprisonment or million-dollar fines," Kirkland said.