Up to 5 years in Prison for Finfluencers Providing Financial Advice without a License
Updated: Dec 26, 2022
Australian government warns "Seek legal advice if you are unsure."
A few months ago, the Australian Securities and Investments Commission (ASIC) issued an information sheet that Australian influencers, on Instagram, Twitter, TikTok, etc, who continue to share stock and asset advice without a license could now be charged penalty charges or up to 5 years in jail for offering irresponsible financial tips.
Soon after the information was out and the watchdog listed the acceptable and unacceptable contents, thousands of Australian finfluencers removed their old posts to comply with the new rules.
1. Why new regulations?
One most obvious reason behind the government's recent action is that the number of finfluencers has been increasing rapidly. Another reason is based on data about changes in people's financial behavior that about 64% of young residents get influenced by content creators who provide financial advice. Compared to several years ago, misleading and deceptive content on social media platforms from unlicensed financial services skyrocketed, leading many non-financially savvy people to waste money. Thus, these two related reasons are considered the explanations behind the Australian government's new law on finfluencers.
2. Actual cases discussed
Additionally, it is significant to understand that the ASIC has already taken influencers to court. Tyson Scholz, a 36-year-old operating a financial services business as @asxwolf_ts without a license on Instagram and Twitter has been accused of delivering training courses and seminars about trading in securities. Because of this, he has shut down his social media platforms as public to make sure to follow new rules. Moreover, a micro-influencer Ellie Withers, who posts as @ladyfire on Instagram, has deleted or archived some of its contents.
3. Pros outweigh cons
The government's newly released do's and don'ts for content creators appear too harsh. However, there are also some positive aspects - the implementation of the new law potentially reduces the number of financial issues regarding SNS information provided by influencers and makes influencers themselves aware of what can and cannot be posted on social media.
Eventually, how all these new regulations affect finfluencers in Australia is yet unclear - to some, these may be too stringent and unacceptable. Nevertheless, compared to most other countries that provide no instructions, the ASIC's newly released information sheet would be the clearest instructions to follow.