ASIC Warns Companies Against Engaging with Financial Influencers

The Australian Securities and Investments Commission (ASIC) has recently issued a warning notice, reminding companies to be mindful of the regulatory risks associated with engaging with financial influencers, commonly known as "finfluencers".

ASIC highlighted that individuals or corporations who don't hold an Australian Financial Services (AFS) licence, or who aren't authorised representatives of an AFS licensee can't provide financial advice. As most finfluencers do not hold an AFS licence, they are not subject to the requirements that apply to licensees.

In addition, the regulator mentioned that a finfluencer may be collecting remuneration from multiple sources simultaneously. They may be generating income from content clicks or views, which may give rise to a conflict of interest or result in advice that's not in consumers' best interests.

Furthermore, ASIC is seeing a rise in attempted market misconduct, such as "pump and dump" schemes. ASIC monitors the market for this activity and will act when it sees extreme price movement.

"For some listed companies, finfluencer collaborations may seem like a fast, effective way to promote issued securities to the next generation of young retail investors. However, companies should be cautious when engaging finfluencers — as part of their promotional initiatives generally, or in connection to corporate transactions,"ASIC stated.

"If you're approached by a finfluencer seeking to collaborate, or you're considering reaching out to one, make sure you do your due diligence as they may be contributing to your regulatory risks,"the regulator added.

Last week, ASIC has released an information sheet on records of advice (ROA)​ and three ROA examples to provide clarity to financial advisers and advice licensees on their obligations when using ROAs to provide personal advice to retail clients.