Online Influencers and Unlicensed Product Advice

Financial influencers (Finfluencers) are unlicensed people who discuss financial matters online and in some way influence their audience and or promote affiliate links.  They have been in the news lately mostly because of a recent ASIC crackdown over concerns that many are providing unlicensed financial advice.

Not every statement made online by an unlicensed online influencer is a breach of the law but discussing any financial product or class of product online is definitely straying into dangerous territory.

In Australia, a financial services licence is required to provide financial product advice.  ‘Financial product advice’ is defined as a recommendation or statement of opinion which is intended to influence, or which could reasonably be regarded as being intended to influence, a person making a decision in relation to financial products.  Read the definition at RG175.8.

Financial product advice (as defined) is the critical foundation stone to the definitions of both personal advice and general advice.  That is, both definitions require that the recommendation / statement / opinion / report relates to financial products or product classes, and that there is an ‘intention to influence’.  Read the definition of personal and general advice at RG175.10.

So what is personal advice exactly?  There are two elements to the definition:

  1. It is financial product advice (i.e. a recommendation / statement / opinion / report relates to a financial product or class of product and it is made with an intention to influence); and
  2. It is tailored financial product advice because one or more of the client’s specific relevant circumstances have been considered (or a reasonable person might expect the person giving the advice to have considered one or more of these matters)

For unlicensed influencers, it is more important to realise what general advice is because general advice requires an AFS licence.  There are similarly two elements to the general advice definition:

  1. It is also financial product advice (i.e. a recommendation / statement / opinion / report relates to a financial product or class of product and it is made with an intention to influence); and
  2. It includes all other financial product advice (other than personal advice).

General advice is the type of advice that licensed advisers typically deliver at seminars, webinars, or send to groups of clients in newsletters; and whether the provider of such advice is licensed or not, it includes online financial influencer product-related comments and discussions in the form of social media posts, forums and live feeds, aimed at a group audience.

However, before rushing to brand every financial product statement uttered by an unlicensed influencer as general advice (or personal advice), remember that the definition of financial product advice requires the presence of ‘intention to influence’ (or reasonably be regarded as being intended to influence) for such a recommendation / statement / opinion to cross the line into ‘advice’.

There is generally no problem sharing factual information that describes the features or terms and conditions of a financial product (or a class of financial products) without giving financial product advice.

However, if factual information is presented in a way that conveys a recommendation that someone should or should not invest in (or divest from) a particular product or class of product, what originally might start out as factual information from an influencer could quickly cross the line into providing unlicensed financial product advice.

If an influencer does cross the line into ‘advice’, it is more likely to be general advice if the statement or comments are made to a group audience, but it can quickly change to personal advice when answering questions.

All it takes is for the influencer to answer a product-related question asked by an audience member where the influencer’s reply takes into account one or more of the inquirer’s relevant circumstances.  An example of such a loaded personal advice question is, “I am 65 and have just retired so is the type of EFT you are endorsing suitable for me?”

The problem for unlicensed ‘influencers’ is that many earn money from their online influencing activities, often from promoting affiliate links.  If an influencer receives benefits or payment for their comments in relation to financial products, they are more likely to be providing financial product advice because receipt of payment indicates an intention to influence the audience.

Read ASIC INFO 269 ‘Discussing financial products and services online’ recently issued in March 2022.