Financial Services in the Age of Social Media: The Rise and Risks of “Finfluencers”


During the COVID-19 pandemic, a record number of newbie traders flocked to the market, propelling financial influencers (‘finfluencers‘) in the ASIC spotlight and squarely placed them as part of ASIC’s enforcement mission.

The rise of finfluencers is not surprising in the age of social media and digital. As financial services and the distribution of financial products become more difficult and complex in Australia, finfluencers are rapidly developing a niche by providing more accessible and digestible financial information to Australians. It has also led a number of financial services licensees and product manufacturers to engage with influencers as a valuable distribution channel.

In this context, on March 21, 2022, ASIC published a new information sheet INFO 269 Discuss financial products and services online containing important information for influencers and AFS licensees who engage influencers, including examples of what ASIC considers financial product advice, dealing in organizing and conducting in a misleading and deceptive manner.

In this article, we explore some of the common pitfalls and risks that AFS licensees should be aware of when engaging influencers.

When will an influencer provide a financial service?

The INFO sheet focuses on two main scenarios in which influencers can be perceived as providing a financial service:

  • deal in arranging under Section 766C of the Companies Act; and
  • advice on financial products under Section 766B of the Companies Act.

Given the identity of finfluencers as actors, sportspeople, celebrities and other social media personalities, in our experience there is often a reluctance to name these individuals as authorized representatives. However, as we will see below, the risk of influencers turning to the provision of financial services is high. Therefore, by engaging influencers who are not licensed or otherwise authorized under an AFSL, the scope of activities that an influencer may undertake will be significantly limited.

Of course, there are also a range of disclosure obligations that may be triggered when engaging an influencer.

Deal by arranging

As ASIC recognizes, causing a person to trade in a financial product, such as buying or selling a financial product, is a financial service – specifically, trading under Section 766C of company law. Whether you arrange for someone to transact or not will depend on the extent of your involvement in completing the transaction. The arrangement is likely to happen where the influencer is actively involved in carrying out the transaction.

The activities of influencers can vary in this regard – we see the following common activities:

  • provision of information on financial products;
  • provide a hyperlink to the product issuer’s website; and
  • share discount codes.

We consider that absent other involvement, the above activities by themselves are unlikely to constitute an arrangement. However, this is a decision that will need to be made on a case-by-case basis, taking into account the entire transaction involved and any compensation/benefits obtained by the influencer.

Although ASIC provides some brief examples in the Organization INFO sheet, more detailed guidance is provided in ASIC Regulatory Guide 36 Licensing: advice and negotiation of financial products.

Advice on financial products

By their very name, finfluencers ultimately influence their viewers with the content they create and share with their followers. When discussing financial products and services, it is prudent for influencers to ensure that their content does not stray from factual information or, if duly authorized, general advice. Given the identity and large number of followers that many finfluencers have, this is a delicate balance to manage.

As a reminder, advice on financial products is defined as:

  • recommendation or one statement of opinion or a report of either of these things;
  • This is intended to influence a person or persons to make a decision regarding a particular financial product or a category of financial products, or an interest in a particular financial product or a category of financial products; Where
  • could reasonably be considered to have intended to exercise such influence.[1]

The fact that an finfluencer gives advice on financial products does not only depend on the content they broadcast. It also depends on their popularity and power of attraction, as well as the channels through which they operate.

While the wording of the disclaimer may mitigate the risk of financial product advice, it alone will not determine whether a communication constitutes financial product advice.[2] As the INFO sheet notes, it’s important for an influencer to consider the overall impression and circumstances of their content.[3] In addition to the general impression, ASIC also clarifies that certain statements made by influencers may not only constitute advice on financial products, but may also be misleading and misleading if the claims cannot be substantiated, for example that a particular financial product “will generate significant returns”. ”

In our experience, general advice risk is the biggest area of ​​risk to manage for influencers and AFS licensees engaging influencers. We run through some common practical examples in the table below.

In each case, as with the arrangement, the totality of the circumstances will need to be assessed to determine the general position of advice/information only. Our comments below regarding risk should be seen in the context that one of the primary reasons, if not the The primary reason an influencer is hired by a sponsor is to leverage the influence of the influencer. Thus, generally speaking, the influencer is engaged to, at least implicitly, support the sponsored product or service. However, risk is a different issue because, in practice, if the position was that any influencer would give general advice on financial products, then the result would be unachievable. A preliminary statement or opinion must be expressed. Although wearing a branded t-shirt may be intended to influence sales, there must be an endorsement or statement of opinion. Of course, there is no reason why a recommendation or statement of opinion should be in written form. It can also happen through driving.

Any such conduct must be assessed in context. This is particularly relevant with social influencers. For example, just because someone is wearing a branded t-shirt in a public forum doesn’t mean they are giving general advice. The specific conduct, context and cadence of the interaction will be critical in determining whether general guidance is indeed being provided. Our comments below, particularly with respect to risk, should be read in this context.

Implications for Licensees

AFS Licensees who engage influencers should consider the implications of the above, as it could mean that influencers are “representatives” of their license (or perceived as such), meaning that there would be a myriad of obligations triggered on the part of the licensee. This causes challenges given the nature of influencers’ work, including an unlimited following and the fact that they can provide advice/information in the form of a private direct message (“DM”) or in a lifetime format. limited, such as as Instagram “stories” which usually expire after 24 hours.

For example, if an influencer is a representative of a licensee and provides financial services, the licensee may be required to ensure that influencers:

  • meet applicable training standards;[4]
  • have acted in the best interests of the client with respect to the advice;[5]
  • provide appropriate advice to the client;[6]
  • provide advice based on complete and accurate information;[7]
  • when promoting financial products subject to design and distribution requirements, take reasonable steps to distribute the products in accordance with the product’s target market;[8] and
  • manage and prioritize any potential conflict of interest between them and the client.[9]

Case law including that of IR Advisory Group in March 2021 (see our article here) warns us of the potential repercussions of not having sufficient mechanisms in place to monitor the compliance of an Authorized Representative.[10] In this case, not only was the general catch-all duty to ensure that the representative complies with financial services laws was violated,[11] but it has been found that a representative’s lack of control can more broadly lead to a breach of the duty to act effectively, honestly and fairly.[12] As ASIC points out in the INFO sheet, licensees should exercise caution when engaging finfluencers in paid work and endorsements. They must exercise due diligence, particularly if the influencer can be considered their representative, and must put in place appropriate risk management, monitoring and compliance processes.


There are, however, exemptions for commentators on various media platforms where general advice is provided that some influencers and licensees could potentially rely on to avoid being caught by the financial product advice provision:

  • by publishing a journal that is generally accessible to the public and whose sole purpose is not to provide advice on financial products;[13]
  • in transmissions made by means of an information service where the transmissions are generally available to the public where the sole or primary purpose of the transmissions is not the provision of financial product advice;[14] Where
  • in sound recordings, video recordings or data recordings made available to the public and whose sole or main purpose is not the provision of advice on financial products.[15]

Such terminology ultimately does not reflect the reality of today’s media landscape with Instagram, TikTok, and Twitter, but it could be said that the vast majority of social media content in this space comprises sound or video recordings of some description.

There are also transmission exemptions available, whereby a person is considered not to be providing advice on financial products when they are only transmitting content prepared by another person, such as the AFS licensee.[16]

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