The much coveted 'finfluencers' continue to chase that follow as the Australian Securities and Investments Commission (ASIC) catches on. ASIC has identified 28% of young people follow at least one finfluencer on social media with almost two-thirds of those young people changing at least one of their financial behaviours as a result.
ASIC's information sheet (Info 269) considers the regulatory requirements applicable to influencers discussing financial products and services online or promoting affiliate links, and the obligations on AFS licensees relying on those influencers.
Influencers
A. Financial Product Advice
In the absence of an exemption or authorisation to provide services as a representative of an Australian financial services licensee, influencers must hold an Australian financial services licence to provide a recommendation or express an opinion intending to influence or regarded as intending to influence decisions relating to financial products. Benefits or monetary compensation in exchange for comments on a financial product are likely to be seen as intending to influence a decision.
B. Dealing by Arranging
Influencers should exercise caution when sharing links to financial products. Arranging for someone to buy or sell a financial product is a financial service that requires a licence. For example, a licence is required when sharing a unique link to a trading platform that earns a fee for the influencer and provides a discount to the person clicking through to purchase shares on the trading platform .
C. Misleading or Deceptive
Influencers must ensure all statements regarding financial products are credible, true and accurate. Failure to do so may amount to conduct that is misleading or deceptive or likely to mislead or deceive. For example, guaranteeing that investing in an exchange-traded fund will generate positive returns is likely to be misleading or deceptive.
To avoid going viral for all the wrong reasons, influencers should consider:
• disclosing any benefits or remuneration received,
• entering into an agreement with any person paying for the promotion of their financial product. The agreement should set out the rights and responsibilities of each party, including whether the influencer will be appointed as an authorised representative under the other party's Australian financial services licence.
Australian Financial Services Licensees
Licensees could find themselves liable for the misconduct of the influencers they use. A licensee is required to ensure that any influencer acting on its behalf is adequately trained and complies with financial services laws. The use of influencers could also impact upon the licensee's design and distribution obligations.
Licensees should consider:
• monitoring influencers through appropriate risk management systems, adequate compliance controls and robust processes,
• ensuring any agreement entered into with an influencer carefully sets out an influencer's responsibilities, such as only promoting products to the intended target market, the minimum levels of training and education expected, and general compliance obligations with financial services laws.
