Aussie Regulator Joins Crackdown Against Finfluencers: Issues 18 Notices

The Australian financial market regulator has issued warning notices against 18 social media ‘finfluencers’ who were suspected of unlawfully promoting high-risk financial products, like contracts for differences (CFDs) and other over-the-counter (OTC) derivatives, and offering financial advice without holding any licence.

A Global Crackdown on Finfluencers

Announced today (Thursday), the action by the Australian Securities and Investments Commission (ASIC) came as the regulator joined nine other global regulators to crack down on the so-called finfluencers.

The UK’s Financial Conduct Authority (FCA) recently revealed that its actions against “rogue finfluencers” involved three arrests, the launch of criminal proceedings, cease-and-desist letters, and warning alerts.

Read more: FCA Warns Tech Firms Not Doing Enough to Stop Illegal Forex Finfluencers

“We are seeing a pattern where these unlicensed finfluencers invite consumers to join their closed communities or forums to learn their secrets to success or copy their trades,” said ASIC Commissioner Alan Kirkland.

These finfluencers position themselves as trading experts and provide unauthorised financial advice on high-risk products, which can cause harm to consumers. According to Moneysmart research, 41 per cent of young Australians seek financial information or advice from online sources such as social media, including finfluencers.

The Aussie regulator further highlighted that the social media content of the finfluencers is often misleading, suggesting the prospect of success from the products or trading strategies they promote. To lure retail traders, they usually share images of lavish lifestyles, sports cars, and other luxury goods.

Regulating the Industry

The regulator in Dubai, which is also part of the global regulatory consortium cracking down on finfluencers, recently became the first to mandate a regulatory licence for individuals who produce financial content online. The licence targets those offering investment advice, market commentary, or financial promotions through digital channels.

Although ASIC does not have such specific requirements, it made it clear that finfluencers offering financial advice need a licence under the existing regime regulating financial advisers. Earlier, the regulator also cracked down on high-profile finfluencers for unlicensed activities.

“Australia’s financial services laws protect investors and promote market integrity,” Kirkland added. “They set minimum requirements and provide important protections for investors if something goes wrong.”

“If you spruik or discuss financial products and services online, you need to carefully consider how the law applies to you and seek legal advice if you are unsure.”