top of page

Keeping up with the Kardashians: ASIC’s close watch on the rise of the ‘finfluencer’

Social media has become a breeding ground for growing interest in the stock market and in cryptocurrency among their loyal users, the younger generation. This interest is largely fed by a proliferation of celebrity ‘finfluencers’ who generate and disseminate financial-related content for their huge followers on platforms such as TikTok, Twitter and Reddit. A social media user does not need to search far to find countless tutorial-like videos and pages of instantaneous chatroom-style commentary relating to a wide range of financial topics.

In 2021, we saw the impact of “Redditors” on the stock price of NYE-listed company, Gamestop. We also saw “pump and dump” activities, being the artificial creation of hype to inflate the price of an asset, by social media users such as what happened with the cryptocurrency Dodecoin.

So, what does this all mean for ‘finfluencers’ and why is chief company regulator, the Australian Securities and Investments Commission (ASIC), concerned despite a Federal Minister dismissal of their influence to be like that of the “bloke at the pub”. What is a ‘finfluencer’?

A ‘finfluencer’ is a portmanteau for a ‘financial influencer’, a kind of social media influencer who creates social media content relating to financial products. Typically, the content would promote some agenda, often for some commercial benefit by way of sponsorship or advertising benefits.

ASIC has cautioned investors about a number of listed companies who have engaged ‘finfluencers’ to leverage their social media channels to promote their issued securities, given these ‘finfluencers’ do not hold Australian Financial Services Licences (AFSL).

What is an AFSL and why might finfluencers and/or their sponsors need one?

Section 911A(1) of the Corporations Act 2001 (Cth) (Corporations Act) provides that, subject to that section, a person who carries on a financial services business must hold an Australian Financial Services Licence (AFSL) covering the provision of financial services.

Section 766A(1) of the Corporations Act states that a person providing advice about financial products – including, for example, shares, bonds, superannuation or insurance – is a financial service and is therefore required to hold an AFSL, or must be an authorised representative of an AFSL holder.

In the context of section 766A(1), this raises some important questions for finfluencers:

  1. What is financial product advice and are there any exceptions?; and

  2. What does it mean to provide financial product advice?

Financial product advice

Section 766B(1) of the Corporations Act defines financial product advice to mean a recommendation or a statement of opinion, or a report of either of those things, that:

  1. is intended to, or could reasonably be regarded as being intended to have such an, influence a person or persons in making a decision in relation to, among other things, a particular financial product or class of financial products; and

  2. is not an exemption from the definition of financial product advice.

The Courts have applied a broad interpretation to the statutory language of financial product advice, including to mean providing or presenting information that impliedly makes a recommendation or statement of opinion relating to a financial product: Australian Securities and Investments Commission (ASIC) v Park Trent Properties Group Pty Ltd (No 3) [2015] NSWSC 1527 at [366].

There are certain exceptions to the requirement of having an AFSL. Possibly relevant to finfluencers, is the exception for the provision of general advice relating to financial products if:

  1. the advice is provided in sound, video or data recordings;

  2. the person makes, among other things, the recording available to the public; and

  3. the sole or principal purpose of the recording is not the provision of financial product advice.

Ultimately, whether or not a finfluencer’s content would be caught by this or another exception, will largely depend on the nature of the content.

Providing financial product advice

ASIC notes in its Regulatory Guide 36 that “the person who provides the advice will generally include the author(s) of the advice as well as the principal for whom they act. It also includes any other person who endorses the advice, or any person who causes or authorises the provision of the advice”. Accordingly, for those listed entities who are contracting ‘finfluencers’, they may be caught by this provision.

Separate to the ‘provision’ of financial advice, listed companies may be found to be ‘involved’ in a finfluencer’s contravention of section 911A(1), if they have “been in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the contravention”.

What if a finfluencer uses a disclaimer?

It is almost a finfluencer’s mantra to include a disclaimer along the lines of, “I am not a financial adviser and this is not financial or investing advice. For financial or investment advice, you should speak to a licensed expert”. While this does not automatically immune the finfluencer, it may assist by reducing the likelihood of misleading or confusing the viewers about the purpose of the communication, particularly the provisions under the Corporations Act and the Australian Securities and Investments Commission Act 2001 (Cth) in relation to misleading and deceptive conduct.

What are the potential penalties?

The maximum penalty for providing financial advice without an AFSL in contravention of section 911A, is summarised as follows:




Civil penalty

The greater of:

  • 5,000 penalty units, presently $1.11 million; or

  • 3 times the benefit obtained or detriment avoided.

The greater of:

  • 50,000 penalty units, presently $11.1 million;

  • 3 times the benefit obtained or detriment avoided; or

  • 10% of annual turnover (capped at 2.5 million penalty units, presently $555 million).

Criminal penalty

5 years prison sentence and/or 600 penalty units, which is presently $133,200.

6,000 penalty units, which is presently $1,332,000.

As noted above, section 79 of the Corporations Act could place a finfluencer’s principal corporate entity ‘on the hook’.

Key points

  1. If you are a finfluencer or an entity engaging a finfluencer, and you do not have an AFSL but are providing financial advice – you both may be exposed to significant liability.

  2. ASIC is monitoring this space very closely. It has reported a significant rise in complaints since early 2020 . It will be of no surprise if we hear more about ASIC and their investigations.

  3. Do not rely entirely on a generic disclaimer, as it may be insufficient to protect you from liability. Ultimately, the most important thing is the overall impression created by the content. Tread carefully when creating your content.

  4. Finally, if you are an investor, spend more time reading publications such as the AFR and listening to qualified advisors than listening to finfluencers on TikTok or Twitter for investment advice.

Our team at Henry William Lawyers is well placed to advise you in relation to AFSL requirements for those who may be providing financial advice. Please contact Tom Morgan or John Nash if you need any assistance.


Featured Posts
bottom of page