Influencers in Australia may now face jail time if they offer 'unlicensed' financial advice on social media
Australia’s government is cracking down on “finfluencers.”
The term, a combination of “finance” and “influencers,” describes social media users who dish out budgeting or investing tips online. Now, those users could face up to five years in jail if they offer “unlicensed” advice.
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That’s according to a new information sheet released in March by the Australian Securities and Investment Commission (ASIC).
ASIC’s statement lists a wide range of advice, much of which is popular on platforms like TikTok and Instagram everywhere, not just in Australia. In the U.S., online communities like StockTok often feature influencers recommending specific investments, such as high-upside stocks or cryptocurrencies.
Under Australia’s new guidelines, finfluencers are still able to explain general financial concepts — such as ETFs, bonds or mutual funds — as long as they aren’t recommending specific purchases. Users can also still provide generic budgeting and savings tips.
But recommending specific stocks, which is a content staple for many “finfluencers,” is now considered a violation. As Insider reported, some users have gone back and deleted old posts to avoid being in violation.
ASIC provided examples of unrecommended advice. The following statements, when given without a license, could constitute a violation and therefore jail time:
“I’m going to share with you five long-term stocks that will do well and which you should buy and hold.”
“ETFs will make you a guaranteed positive return.”
Meanwhile, a more objective, explanatory statement would likely be OK:
“ETFs can track different asset classes or individual assets that may generate a return, but the ETF provider owns the shares or assets on behalf of the fund members.”
According to the Guardian, an ASIC survey found that one-third of Australians between ages 18 and 21 followed a “finfluencer.” And 64% of those users reported changing their behavior due to something they saw in a post.
The problem in the U.S. is similar. A recent survey by software company IntelliFlo found that 44% of Gen Zers and 49% of millennials turned to digital sources for their financial advice. Around 15% of that advice came from largely unlicensed sources on TikTok and Instagram.
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