ASIC Warns Companies Using Social Media Influencers To Promote Financial Products

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The Australian Securities and Investments Commission (ASIC) warns companies to check whether social media “influencers” who promote their financial products or securities are authorized to provide financial advice, or are authorized representatives of advisers.

ASIC Commissioner Cathie Armor said companies that hire unlicensed influencers could be at risk of violating the Corporations Act 2001. They should also be aware that influencers “can generate revenue from clicks or clicks. views on content, which may give rise to a conflict of interest or result in advice that is not in the best interests of consumers, ”she said.

ASIC Commissioner Cathie Armor has warned companies that they can break the law if they hire reputable social media influencers to give unlicensed financial advice.Credit:James alcock

The number of influencers on social media is growing, and it is difficult for ASIC to control those who are reputed to give unlicensed financial advice.

Licensees and their representatives must adhere to certain training standards, manage conflicts of interest and provide financial services “in an efficient, honest and fair manner”. Most influencers are not allowed.

While many only discuss personal finance in a general way and are generally not required to have a license, there are those who approve particular investments, where they are paid for promotion.

ASIC is undertaking a review of influencers to understand their business models and how financial services law applies to their business.

The regulator is also engaging with social media platforms on their responsibilities and the limits of acceptable promotion, and is stepping up monitoring of online forums that promote shares of listed Australian companies.

Armor says companies can view collaborations with influencers as a “quick and efficient way” to promote their titles, especially to younger retail investors.

“However, companies should be careful when engaging influencers – as part of their promotional initiatives … If you are approached by an influencer looking to collaborate, or if you are considering contacting one, be sure to do due diligence as they may contribute to regulatory risk, ”Armor writes in an article published by the Australian Institute of Company Directors.

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