'Finfluencers' could face up to 5 years in prison if they provide financial advice without a license, Australian government says
By Waiyee Yip Apr 11, 2022, https://www.insider.com/australian-finance-influencers-face-up-to-5-years-jail-crackdown-2022-4 * Australia's finance influencers could face jail time if they give financial advice without a license. * The country's securities and investment watchdog listed content that can and cannot be posted. * Finance influencers, or "finfluencers," have since removed old posts to comply with the new rules. Australia's hugely popular financial influencers — or "finfluencers" — could be jailed for up to five years if they continue giving financial advice to their followers without a license. That's according to an information sheet issued last month by the country's corporate watchdog, the Australian Securities and Investments Commission. https://asic.gov.au/regulatory-resources/financial-services/giving-financial-product-advice/discussing-financial-products-and-services-online/ Finfluencers use social media to advise on everything from financial products to budgeting, with some even promising significant returns on specific investments — despite many not holding financial services licenses. But that's no longer allowed in Australia. "Think about your content carefully and whether you are providing unlicensed financial services, such as providing financial product advice or dealing by arranging," ASIC wrote. "If you carry on a business of providing financial services, you must hold an AFS (Australian Financial Services) license." The information sheet listed several examples of text that would constitute financial product advice. For example, the statement "I'm going to share with you five long-term stocks that will do well and which you should buy and hold" would likely be considered financial product advice as it "intends to influence someone's decision to buy specific financial products," ASIC said. However, offering budgeting tips would not. Finfluencers who fail to follow ASIC's guidelines could face up to five years in prison, the organization said. ASIS has already taken a finfluencer to court — Tyson Scholz amassed more than 22,500 followers on his Instagram account @asxwolf_ts before it was made private. According to a media release, the regulator accused the 36-year-old of operating a financial services business without a license "by delivering training courses and seminars about trading in securities on the ASX." Those courses were promoted on his Instagram and Twitter accounts, ASIC added. ASIC is seeking orders to restrain him from promoting or carrying any financial services business in Australia. The case is set to return to court in May. In recent years, finfluencers have increased in popularity, especially among younger audiences. According to a December ASIC survey, one-third of Australians aged 18 to 21 followed a financial influencer online. The survey also found that 64% of young people in Australia admitted they changed their economic behavior after listening to an influencer. Finance micro-influencer Ellie Withers, who posts under the Instagram handle @thelady.fire, told Insider that she had to remove some of her old posts to comply with the new rules. "I've had to archive my net-worth updates as they showed what I invest in, and this is not allowed," said the 29-year-old, who does not have a financial services license. "They were posts on what I invest in, like the actual ETFs, and the new rules state we can't share what we invest in as it could influence our followers to buy that." Withers, who has more than 1,300 followers on her account, said that the guide is "very broad and doesn't make it easy to decipher." "There is a lot of turbulence in the finfluencer community right now, with a lot of people of the belief that the guidelines are ambiguous on purpose to make it hard for us to post," she told Insider. "Also, it's unfair to Australian finfluencers as Aussies will now look to overseas information which may not be applicable or may guide them in the wrong." In her latest Instagram post, shared on Sunday, she said that she had invested more than A$21,000 so far this year. "Can't tell you what I've been investing in though, lols," she wrote. -- _______________________________________________ Link mailing list [email protected] https://mailman.anu.edu.au/mailman/listinfo/link
