Speaking before the House of Representatives Standing Committee on Economics, ASIC chair, Joe Longo, said finfluencers are often “extravagant, misleading and unlicensed”.
“The whole area is all about essentially well-known people in the community, or celebrities or individuals who are not the holder of a licence, expressing views about what people should be investing their money in,” Mr Longo said.
“And often doing so in circumstances that are extravagant, misleading and unlicensed”.
While the corporate regulator is continuing its strong engagement in this area, Mr Longo explained that determining where to draw the line regarding the need for regulation is an ongoing process — one that ASIC is engaging on with the financial advice sector.
“What we’re calling out is entities or people overstating what investors or consumers might be putting their money into without a proper basis, without being properly qualified, and doing so in some circumstances where they are required to have a licence,” Mr Longo said.
“A lot of these individuals [finfluencers] feel they’re doing the right thing and that they’re being helpful, but that doesn’t mean that this activity isn’t something that isn’t regulated and that it isn’t misleading,” he added.
Mr Longo noted that the use of social media to disseminate this type of information has meant that a lot of people are at the mercy of being impacted.
“A lot of individuals are leveraging their reputation in the community to lend credence to whatever it is they’re suggesting people should be doing. In those circumstances that can often lead to people losing their money,” Mr Longo said.
ASIC took a major step in the finfluencer space when it released an information sheet in March which outlined how the law applies to them and licensees who use them.
The guidance outlined activities where influencers may contravene the law if they are unaware of their legal requirements, considerations they should take, and also guidance for licensees who are engaging with influencers, with ASIC warning: “If we see harm occurring, we will take action to enforce the law.”
Meanwhile in July, The Advisers Association CEO, Neil Macdonald, said that while finfluencers can play a role in financial education particularly for younger people, it is “extremely unfair that well-qualified, experienced, professional advisers have to go through so many more hoops” to provide that education and information.
A recent survey run by Superhero on over 1,300 investors found that just 11 per cent deem finfluencers trustworthy.
Investors aged between 18 and 24 were the most likely to consider finfluencers trustworthy, with one in five investors saying they trusted finance-related content creators.
While acknowledging that the role of finfluencers has been an “incredibly hot topic” over the last six months, Superhero CEO and co-founder, John Winters, said what’s clear from its research is that investors recognise the level of risk that comes with following financial advice shared by unqualified people.
If you can accept that people only care about themselves and you deliver your advice and services with this in alignment with your clients core values. Then not only will you have better client relationships, you will make more money, have a better quality of life and attract more clients, rather than fearing your services will be undermined by others including finfluences.
So Michelle Levy recommends product providers be allowed to sell their products with very little information and using unregulated staff, but the head of ASIC is concerned when finfluencers provide general advice or product recommendations.
Can’t wait to see ASICs subsmission to the QAR.
Ms Jane Hume – you love Finfluencers and constantly stated they don’t need to be Regulated and consumers are at their own risk to get ripped off.
Wasn’t Ms Finfluencer Hume, Frydenberg and LNP just so dam wonderful for Advisers : – /