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ASIC Issues Warning on Financial Advice from Social Media Influencers
Australians are being cautioned to exercise caution regarding financial advice shared via social media. The Australian Securities and Investments Commission (ASIC) has identified 18 financial influencers, dubbed "finfluencers," who may be dispensing misleading information to their substantial follower base.
Credibility Concerns
ASIC Commissioner Alan Kirkland highlighted the critical need for consumers to differentiate between entertaining content and trustworthy financial advice, stating that popularity does not equate to credibility. He urged individuals to verify the credentials and licensing of these influencers before acting on their guidance.
Many of these finfluencers claim expertise in stock market trading, but ASIC has found that a significant number lack the necessary qualifications to provide financial advice. Some influencers are promoting high-risk investment products which could potentially harm consumers.
Social Media Landscape
Finfluencers often entice followers with images depicting a lavish lifestyle, showcasing expensive cars and luxury goods, suggesting that such a lifestyle results from their investment advice. This tactic can lead Australians away from public platforms and into private online groups where oversight becomes challenging, allowing these influencers to share potentially harmful insights.
According to Australian law, providing financial or investment advice without a proper licence is illegal. ASIC has issued warning notices to a number of these finfluencers, part of a wider international effort involving authorities from countries like the UK, UAE, Italy, Hong Kong, and Canada. These global actions have targeted creators suspected of illegally promoting high-risk financial instruments.
Global Crackdown
The coordinated actions against finfluencers have included arrests, the issuance of warning notices, and the removal of websites, alongside educational initiatives involving licensed influencers aimed at improving compliance and consumer awareness.
This is part of a broader crackdown on discordant practices that follow regulations established in 2022, which ensured finfluencers adhere strictly to guidelines that govern the dissemination of financial advice. Since then, many influencers have adapted their messaging or sought proper licensing to comply with Australian law.
CPA Australia’s Caution
In a similar vein, CPA Australia recently raised alerts over misleading tax advice from various content creators. In one case, a finfluencer suggested that pet expenses could be claimed as tax deductions by framing them as business-related. This inaccurate advice poses a risk of confusion and potential penalties for unsuspecting taxpayers.
CPA Australia’s Jenny Wong remarked that although some advice might carry a grain of truth, it typically applies to a very narrow field of workers. She cautioned against exaggerations by finfluencers that could mislead audiences into believing they have access to easy financial solutions.
Importance of Professional Advice
Wong emphasized the complexity of the Australian tax system, noting that online popularity does not guarantee expertise. She recommended that individuals consult licensed financial advisors for accurate information related to tax deductions, particularly as the tax return season approaches.
As the digital landscape continues to evolve, the importance of ensuring that financial and investment advice comes from licensed and credible sources cannot be overstated. It remains crucial for consumers to remain informed and discerning about where they source their financial guidance.
In summary, the rise of finfluencers raises substantial risks for consumers, who may be swayed by the allure of wealth displayed on social media. As ASIC and other regulatory bodies take action against unqualified advisors, the call for due diligence when seeking financial guidance has never been more pertinent.
