Discussing financial products and services online
This information sheet (INFO 269) is for social media influencers who discuss financial products and services online. It sets out how financial services laws apply to you – it is your responsibility to ensure that any content you post complies with the law.
INFO 269 is also for Australian financial services (AFS) licensees who use an influencer. You should be aware of your obligations as you may also be liable for any misconduct by the influencer.
You need to make sure you are operating within the law
Financial services laws protect investors and promote market integrity. They set minimum requirements and provide important protections for investors if something goes wrong.
ASIC monitors select online financial discussion by influencers who feature or promote financial products for any misleading or deceptive representations or unlicensed financial services. Carrying on a financial services business without an AFS licence is an offence under the Corporations Act 2001 (Corporations Act), unless you are authorised as a representative of an AFS licensee or an exemption applies. The Corporations Act imposes significant penalties, including up to five years' imprisonment for an individual and financial penalties into the millions of dollars for a corporation.
ASIC takes enforcement action where it is in the public interest to do so.
Note: See www.asic.gov.au/penalties for more information about penalties, including the value of a penalty unit. Penalty units will increase on 1 July 2023.
When you discuss financial products and services online or promote affiliate links, make sure you understand your legal obligations including whether:
- you are providing financial product advice or arranging for your followers to deal in a financial product. If you carry on a business of providing financial services, you must hold an AFS licence (unless you are exempt or are authorised to provide those services as a representative of another person who holds an AFS licence). Otherwise, you may be in breach of the licensing requirements under the law
- your content is accurate and balanced. If your online post is misleading, you may be breaking the law.
Seek legal advice if you are unsure of your obligations.
The case studies below are designed to help you think about these issues, but they are not exhaustive. It is important that you look at the overall impression and circumstances of your content.
Influencer case studies
Financial product advice
The law: Financial product advice is 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.
You can share 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 you present factual information in a way that conveys a recommendation that someone should (or should not) invest in that product or class of products, you could breach the law by providing unlicensed financial product advice.
If you’re an influencer who receives benefits or payment for your comments in relation to financial products, you're more likely to be providing financial product advice because it indicates an intention to influence the audience.
'I’m going to share with you five long-term stocks that will do well and which you should buy and hold.'
Intends to influence someone’s decision to buy specific financial products.
Provides an opinion about these products.
It is likely to be financial product advice.
'ETFs will make you a guaranteed positive return.'
Provides an opinion that a positive return is guaranteed on a class of products.
It is likely to be financial product advice.
It is likely to be misleading – see ‘Misleading or deceptive’ below.
'You can invest by buying shares – this means you are investing in a company and you get to vote on the company’s management and potentially earn dividends.
On the other hand, ETFs can track different asset classes or individual assets that may generate a return, but the ETF provider owns the shares or assets on behalf of the fund members.'
Description of different types of financial products, with no implied recommendation that one is better than another.
It is unlikely to be financial product advice.
'You can save money each week by preparing your own home-cooked lunches for work, instead of eating out.'
Tips on saving money and budgeting that don’t involve financial products.
This is unlikely to be financial product advice.
Dealing by arranging
The law: Arranging for a person to deal in a financial product, such as buying or selling a financial product, is a financial service. Whether you are arranging for someone to deal in a financial product will depend on the extent of your involvement in making the transaction happen.
You promote a link for your followers to access an AFS licensee’s trading platform to trade financial products. It’s a unique link that can’t be accessed anywhere else.
You receive a payment from the licensee for each click-through resulting in use of the platform. People that access the link also receive a benefit when buying the products because of your unique link.
You’re actively involved in making the transaction happen.
The unique link benefits you and adds value for your followers who access the link.
This is likely to be dealing by arranging.
You provide the names and details of AFS licensees that have a platform to trade financial products.
No further involvement in any subsequent transaction.
This is unlikely to be dealing by arranging.
The law: The law prohibits conduct that is misleading or deceptive, or likely to mislead or deceive, in relation to financial products or services. You don’t need to be licensed to breach the misleading or deceptive provisions.
Any statement you make should be true, accurate and able to be substantiated. If you make a prediction, such as a future return or level of risk, you must have reasonable grounds for supporting that prediction. It doesn’t matter whether or not you intend to mislead people – it’s about the overall impression your post creates when it’s viewed, and if your post is in fact misleading, or likely to mislead a member of the audience your post reaches (not the audience you would like to have).
'Holding onto this share in the long term will generate significant returns and is just like depositing your money with a bank!'
It is unlikely the 'significant returns' claim can be substantiated.
Potential product risks aren’t explained or highlighted.
Gives the impression that the product is safe, which may not be true.
This is likely to be misleading.
'Trading in this derivative is a risk-free way to make a quick profit on the side – I made $$$$ from trading these alone!'
Trading being ‘risk free’ is likely to be misleading even if the comment about how much money was made could be substantiated.
This is likely to be misleading.
'ETFs offer good diversification across different asset classes, though there are still risks that the market or sector that the ETF tracks will fall in value.'
Risks and benefits are mentioned with similar prominence.
This is unlikely to be misleading.
Issues to consider for influencers
Do I need an AFS licence?
- Think about your content carefully and whether you are providing unlicensed financial services, such as providing financial product advice or dealing by arranging.
- If you carry on a business of providing financial services, you must hold an AFS licence (unless you are exempt or are authorised to provide those services as a representative of another person who holds an AFS licence).
- Find out more about whether you need an AFS licence. Seek legal advice if you are unsure.
- You may also run the risk of breaching other consumer protection and financial services laws, including the design and distribution obligations which took effect in October 2021.
Am I familiar with relevant regulatory guidance?
- ASIC’s regulatory guides are designed to give you practical guidance so you can operate within the law. Relevant guidance includes:
- Regulatory Guide 36: Licensing: Financial product advice and dealing
- Regulatory Guide 234: Advertising financial products and services (including credit): Good practice guidance
- Regulatory Guide 244: Giving information, general advice and scaled advice
- Regulatory Guide 274: Product design and distribution obligations.
Have I done my due diligence on people who are paying me (including non-monetary benefits)?
- Exercise caution when engaging in paid work and sponsorships. You may have to disclose to your followers any remuneration or benefits you receive.
- Use a documented agreement and understand the terms and conditions of that agreement.
AFS licensees who use influencers
You may be liable for misconduct by influencers you use, so make sure you:
- do your due diligence. If the influencer is acting on your behalf, and is therefore your ‘representative’ for the purposes of the financial services laws, this triggers other obligations (including ensuring they are adequately trained and complying with the financial services laws)
- put in place appropriate risk management systems and monitoring processes to make sure the influencers you are using are not providing unlicensed financial services
- have sufficient compliance resourcing to monitor the influencers you use
- consider if you have engaged an influencer to promote a financial product that is subject to the design and distribution obligations and whether you have taken reasonable steps so that the influencer only promotes the product to consumers in the target market.
Reporting unlicensed activity to ASIC
Unlicensed activity can be reported to ASIC on our How to complain webpage or by calling 1300 300 630 so that we can consider appropriate regulatory action.
Please note that this information sheet is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law regarding that topic, and it is not a substitute for professional advice.
You should also note that because this information sheet avoids legal language wherever possible it might include some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases your particular circumstances must be taken into account when determining how the law applies to you.
This is Information Sheet 269, issued in March 2022.