ASIC puts influencers on notice over unlicensed advice

The information sheet explains issues that influencers need to consider, including whether an AFS licence is needed, being familiar with relevant regulatory guidance and doing their due diligence on people who are paying them.

It also reminds AFS licensees who use influencers to do their due diligence, have appropriate risk management systems and monitoring processes, have sufficient compliance resourcing to monitor the influencers they use and consider their design and distribution obligations.

The information sheet warns that anyone discussing financial products and services online or promoting affiliate links must understand their legal obligations, including whether they are providing financial product advice or arranging for followers to deal in a financial product.

“If you carry on a business of providing financial services, you must hold an AFS licence unless you are exempt or are authorised to provide those services as a representative of another person who holds an AFS licence. Otherwise, you may be in breach of the licensing requirements under the law,” it stated.

“Make sure your content is accurate and balanced. If your online post is misleading, you may be breaking the law.”

ASIC stated that while an influencer can share factual information that describes the features or terms and conditions of a financial product without giving financial product advice, if it is presented in a way that conveys a recommendation that someone should or should not invest in a product or a class of products, then this may be a breach of law.

“If you’re an influencer who receives benefits or payment for your comments in relation to financial products, you’re more likely to be providing financial product advice because it indicates an intention to influence the audience,” the information sheet warned.

ASIC stated that carrying on a financial services business without an AFS licence is an offence under the Corporations Act unless you are authorised as a representative of an AFS licensee or an exemption applies.

“The Corporations Act imposes significant penalties, including up to five years’ imprisonment for an individual and financial penalties into the millions of dollars for a corporation,” it warned.

ASIC commissioner Cathie Armour said the way investors access information is changing.

“It is crucial that influencers who discuss financial products and services online comply with the financial services laws. If they don’t, they risk substantial penalties and put investors at risk,” said Ms Armour.

“ASIC monitors select online financial discussion by influencers who feature or promote financial products for misleading or deceptive representations or unlicensed advice or dealing. If we see harm occurring, we will take action to enforce the law.”