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 (AFSL) is required to provide a ‘financial service’. What constitutes a financial service is defined at s766A /RG 121.24 and includes ‘financial product advice’ which is subsequently defined at s766B / RG 121.25 as a recommendation / statement / opinion / report 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.
The presence of ‘financial product advice’ (as defined above) is pre-requisite to the definitions of both personal advice and general advice. That is, unless the advice is about a financial product AND that advice carries an intention to influence a client in relation to that financial product, the advice is neither personal advice nor general advice.
The part about considering one or more of the client’s relevant circumstances is only relevant once it has been established that the advice is ‘financial product advice’. It is only to determine whether ‘financial product advice is personal or general. The specifics of what is considered to be a financial product is defined at s764A /RG 121.20.
General advice is the type of advice that licensed advisers typically deliver in a group context where the product-related intent to influence exists but it is not aimed at any one particular client. Typical general advice settings include seminars, webinars, online posts, and emailing newsletters and product sheets to various client groups.
This type of activity by unlicensed influencers will attract the wrath of ASIC, particular ‘cash for comment’ product influencers.
If an influencer does cross the line into ‘financial product advice’, it is more likely to be general advice. A factual statement or comment made to a group audience, can quickly change to general advice with one ‘intent to influence’ comment, such as a stock tip. And it can easily escalate to personal advice by an ill-considered answer to an individual’s question.
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.