Australia’s top corporate watchdog has issued a warning to four Aussie financial influencers, known as ‘finfluencers’, after accusing them of sharing “misleading and deceptive” content.
The Australian Securities and Investments Commission (ASIC) said the influencers, who were not named, are suspected of providing unlicensed financial advice through their social media channels, including making misleading claims about guaranteed returns.
In finance, a guaranteed return is a promise that investors will make their money back no matter what — which ASIC Commissioner Alan Kirkland described as a “grandiose claim”, per the Australian Financial Review.
In its warning letter to the influencers, ASIC said it was “concerned that you may be contravening” finance laws “by carrying on financial services business without being authorised to do so”, per the AFR.
“It is your responsibility to be aware of and comply with your obligations,” it added.
Kirkland said he was concerned about ‘finfluencer’ accounts that “spruik” investments without “talking about the risks or downsides”, particularly as young Aussies increasingly turn to social media for personal finance advice.
“What people see online is shaped by algorithms designed to drive clicks and engagement, rather than promoting accurate information,” Kirkland said.
“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.”
In Australia, unlicensed financial advisors are allowed to operate, but only as authorised representatives of the Australian Financial Services, which is responsible for what the ‘finfluencers’ say.
Part of ASIC warning includes the watchdog reviewing one Australian Financial Services licensee which is overseeing content from 15 Australian ‘finfluencers’.
“We’ve identified some influencers and associated licensees that we want to look more closely at,” Kirkland said.
It comes after ASIC research found that more than two-thirds of Gen Z Aussies are using social media to make decisions on their finances, with most within that group saying they somewhat or completely trust the information provided by ‘finfluencers’.
“This continues to be a significant concern for us. We see new finfluencers appearing all the time, and it is a significant and ongoing concern for us that some of those people are providing financial advice in breach of the law,” Kirkland said.
Lead images: Getty
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