On Monday (21 March) ASIC published an information sheet on how the law applies to social media influencers and licensees who use them.
The new guidance outlines 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.”
Dr Angel Zhong – who is a senior lecturer in finance in the school of economics, finance and marketing at RMIT University – applauded the move by ASIC, after recent research by the university found that financial information consumed online influenced investment decisions.
“Unverified investment advice is no different to fake news, which is frequently flagged by social media platforms that urge viewers to read with caution,” Dr Zhong said.
“Newbie investors are particularly susceptible to receiving dodgy financial advice, as the internet replaces traditional outlets like accredited financial advisers.
“With the goal of protecting the financial wellbeing of investors, especially the young and inexperienced ones, ASIC can consider conveying the messages to young investors who rely heavily on finfluencers.
“ASIC will need to do this in a fun and engaging way by using social media, just as the finfluencers attract their large audiences.”
Late last year, the chief commercial officer of advice tech provider Midwinter, Steve Davison called for “a fairer-level playing field” for advisers in competition with finfluencers.
“To be frank, if we look at various surveys, the biggest go-to for advice is family and friends who will have a whole bunch of biases and experiences that won’t always be good or relevant to the person asking the question,” Mr Davison said during an episode of the ifa Show.
“It feels like advisers have one hand tied behind their back… I think it’s bigger than just the regulators.
Just weeks earlier, financial services minister Jane Hume slammed an ASIC review into finfluencers as the equivalent to creating a nanny state.
Does Barefoot count as a Finfluencer? He has been known to give product advice in a mass media environment.
Who gets to decide what is ‘fake news/misinformation’?
Last year’s conspiracy theory is this year’s fact most of the time nowadays…..
Social media outlets that call out fake news has become fact now, so the comparison is poor.
Gosh – what a pickle the Regulators / Industry find themselves in!
Some of these finfluencers make more in a month than most Financial Planners playing by the rules make in a year.
Not sure whether to laugh or cry……….but trying to keep my sense of humor intact seems the best approach still.
Once again we see the lack of an overarching government longevity strategy means the tinkering with definitions may simply create more confusion than it resolves. As the ARLC report released yesterday shows, we are increasingly rushing around trying to plug the leaks in the old financial services dam while the body of water (consumers needing holistic advice) grows. What we need is a better designed and maintained longevity dam – not just a pile of old aggregate.
Will this be the same for Real Estate agents? Who openly advertise and tell clients of the great investment opportunity it is to invest in the property they are selling.
That’s different, not sure how but it apparently is.
Jane will be Jane….and then hopefully no more!!
She is so conflicted with waving through anything “techy” in her role as Minister for the Digital Economy that she doesn’t seem to realise the double standards it creates with her role as Minister for Financial Services. Our code tells us we must not act when these sorts of conflicts arise.
So the solution to protect individuals from poor advice online is to use even more online tools. Perhaps the solution is making genuine human lead advice more accessible, and affordable by reducing regulatory red tape and amending bad legislation.
A classic example is a consumer can tick a box online to be charged a fee… but go see a human and you’re faced signing multiple documents multiple times. That’s crazy….Advisers at tech savy now and we can use AdobeSign, websites, videos, zoom and emails but it’s still multiple processes. Perhaps a certain taxpayer funded Lecturer is out of touch with reality.
Spot on Bob. Well said.
You are correct but there is even more to this – an accountant can tell a client to make catch up contributions- that’s it, but I have to prepare an advice document with all the pros and cons and the charge them for my time- naturally then the client trusts the accountant more.