Jane Hume is adamant that curtailing finfluencers via legislation would be equivalent to creating a nanny state with “unworkable” rail guards that inhibit progress and innovation.
Speaking at the AFA Evolve Conference, financial services minister Jane Hume reiterated her now-infamous view that finfluencers are just the latest iteration in a long line of consumers sharing views about financial markets, not unlike “taxi drivers giving stock tips”.
Playing down their significance on Tuesday, the minister argued against government intervention, noting that the real threat to advise comes from fraudulent members of the industry.
“Earlier this year, I made a comment about TikTok finance influencers or finfluencers, and I made it very clear, if they’re not authorised and registered, they are not financial advisers. They’re the equivalent of a taxi driver giving stock tips,” Ms Hume said.
“It goes without saying that if you make a financial decision that goes drastically wrong based on the musing of a taxi driver or a guy down at the pub or a 16-year-old on TikTok, it shouldn’t be up to the government or indeed the industry to bail you out.
“I stand by that because I am a Liberal; as a Liberal, we don’t believe in establishing unworkable rail guards that inhibit progress and innovation. I have absolutely no interest in perpetuating a nanny state culture, where we resort to banning things to save people from their own follies.”
Instead, she said it is essential that consumers have access to the right information from good financial advisers, before segueing into the cruciality of tough regulation in the advice industry.
Referencing pre-Hayne behaviour that perpetrated ongoing reputational damage to the industry, Ms Hume underlined that unlike finfluencers, it is unauthorised advisers that “undermine the financial adviser brand”.
“This market failure is really what the Financial Adviser Standards attempts to resolve,” she said.
“They signal to the consumer that if you come to me as an authorised, registered financial adviser on a publicly available register that my advice to you will be in your best interest… I am obliged to provide certain disclosures to you, I’ve passed an exam, I fulfilled specific education requirements and I can’t accept commissions or remunerations which would conflict with the duty I have to advise you.
“That’s why unauthorised advisers are the biggest risk to this industry.”
Earlier this year, survey results by MLC revealed that as many as 13 per cent of Aussies aged between 18 and 34 are regularly using platforms such as TikTok, Facebook and Instagram as a financial resource.
And while Ms Hume maintains her lukewarm view of finfluencers, RMIT University expert Dr Angel Zhong told ifa sister brand nestegg earlier this year that unmoderated investment advice provided in social media platforms could lead to herding behaviour in financial markets.
Calling for explicit measures warning vulnerable viewers about the reliability of financial advice on social media, Dr Zhong said “unverified investment advice is no different to fake news, which is frequently flagged by social media platforms that urge viewers to read with caution”.
The president of the commission has suggested the advice industry needs a “regulatory rethink” in regards to its current legislation.
The regulator has also banned the director of the firm linked to the Mayfair 101 Group from controlling a financial services entity.
The big four bank has confirmed the move today.
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