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01.04.2022

News

ASIC warns social media ‘finfluencers’ and AFS licensees

ASIC has published an information sheet (Info 269) about discussing financial products and services online which sets out how the financial services laws apply to ‘finfluencers’ and AFS licensees who use them. ‘Finfluencer’ is the common term for someone engaged to promote financial products through social media platforms such as Facebook, YouTube, Instagram, and TikTok.

Lawyer Claudia Blades warns AFS licensees who use finfluencers may also be liable for their misconduct and need to take precautions.


What obligations do finfluencers have?

ASIC warns finfluencers should make sure they understand their legal obligations when discussing financial products and services online, as there are serious risks involved and they could breach of the Corporations Act.

The information sheet highlights some of the legal obligations as follows:

  • Providing financial product advice or arranging followers to deal in a financial product requires you to either 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.
  • Ensure the content is accurate and balanced and not misleading.

What obligations do AFS licensees have?

AFS licensees who use finfluencers may also be liable for their misconduct and need to take precautions such as:

  • Thoroughly completing due diligence and understanding your obligations if a finfluencer is acting on your behalf (this means they are your ‘representative’ for the purposes of the financial services laws which triggers other obligations).
  • Using appropriate risk management systems.
  • Having sufficient compliance resourcing.
  • Considering the design and distribution obligations and whether you have taken reasonable steps to ensure only to promote the product to consumers in the target market.

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

The law also prohibits conduct that is misleading or deceptive, or is likely to mislead or deceive, in relation to financial products or services. A finfluencer does not need to be licensed to breach the misleading or deceptive provisions.

Contact our team if you are unsure of your obligations.


Authors

Claudia Blades

Claudia Blades

Lawyer

Contact McMahon Clarke

Brisbane
T +61 7 3239 2900
A Level 7, 100 Creek Street, Brisbane Qld 4000

Melbourne
T +61 3 9909 1400
A Level 2, 696 Bourke Street, Melbourne Vic 3000