Aussie social media influencers who specialise in finance are being targeted under a new federal crackdown.
‘Finfluencers’ are content creators who offer financial advice in investing, budgeting and all things money across their social media platforms.
They've recently come under scrutiny by the Australian Securities and Investments Commission (ASIC), as many financial content creators don’t have a licence.
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ASIC released new guidelines that state influencers who continue to talk about stocks, investment funds or financial products without a license will face five years in jail as well as a hefty $1 million fine.
ASIC's executive director of market supervision, Greg Yanco, said the corporate watchdog had enforced more severe punishments to prevent the dissemination of misinformation to the general public.
He told ABC News: "If you're an influencer, and you're providing financial advice, then we'd expect you to have a licence.
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"In fact, you're required to have a licence. And if you don't have a licence, then you need to be careful not to provide financial advice.
"The safe areas of providing information are about, what is a share, and what are the different types of investments you can make, without going to the stage of suggesting particular types of shares or, or investments would be wouldn't be appropriate."
According to AFR, around 30 of these influencers attended an ASIC briefing last week, which outlined the new regulations to determine whether they could profit from their content.
Many finluencers who were in attendance told the news outlet that they were ‘shocked’ by the change of laws, especially by the regulation that only licensed financial advisers can recommend financial products.
Associate Professor of Finance at RMIT University Angel Zhong told ABC News the recent laws intend to change the finfluencer business model.
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“I think this is a wakeup call for finfluencers,” she said. “A lot of finfluencers have removed affiliate links on their pages, and removed posts where they recommended a financial product or declared they no longer make this recommendation.”
Despite the crackdown on financial influencers, the new regulations don't cover cryptocurrency.
Mr Yanco also added that ASIC could not regulate how cryptocurrency is covered in social media content as it’s unregulated and not registered as a financial product, which has left a significant loophole in the rules.
He told ABC News: "It is an area that concerns us because of the lack of protections but at the moment,” he said
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“ASIC is not able to regulate crypto assets that are not financial products. So if you do invest in those products, you're effectively on your own."
Featured Image Credit: AlamyTopics: Australia, Social Media