Australia Cracks Down On Social Media ‘Finfluencers’ For Illegally Promoting Risky Investments
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Australian corporate watchdog, the Australian Securities and Investments Commission (ASIC), recently issued a warning notice to 18 social media influencers. These are individuals suspected of illegally promoting high-risk investments and giving unlicensed financial advice.
The move comes as part of a broader coordinated international crackdown on so-called “finfluencers,” who use social media to gain a following and then provide financial advice to investors and traders.
As mentioned, the campaign to crack down on this behavior is quite broad, involving collaborating regulators from eight different nations. Apart from Australia, other countries whose regulators have joined the move include the UK, UAE, Hong Kong, Italy, and multiple Canadian provinces.
The joint effort was named the Global Week of Action Against Unlawful Finfluencers, and it saw a number of regulatory actions. In some cases, collaborating regulators took entire websites down, and there were even instances where influencers were arrested.
Apart from that, the initiative also saw the launch of educational programs aimed at protecting investors, as well as consumer alerts designed to raise awareness of the issue.
Finfluencers Are Selling A Dream At Real Cost For Australian Investors
ASIC Commissioner Alan Kirkland commented on the initiative, stating that the regulator has observed influencers presenting themselves as trading gurus and publishing risky products, such as OTC derivatives and CFDs. He added that they tend to post flashy content, like designer gear, sports cars, luxury trips, and other similar things meant to sell a dream, but engaging with these products comes at a real cost for everyday Australians.
Some influencers have invited followers to join private groups or paid communities, promising exclusive trading strategies and tips. However, Kirkland warned that doing so is illegal if done without proper licensing.
ASIC has been dealing with this problem for years now, and it even raised guidelines in 2022 on what influencers are allowed and not allowed to say when promoting financial products. Since then, the number of promotional posts from unlicensed influencers has declined considerably, but enforcement efforts continue, especially since social media platforms remain a popular way to provide financial advice, despite being completely unregulated in this regard.
