The Australian Securities and Investments Commission has warned finance influencers on TikTok and Instagram that they could face jail time if they give financial advice without an appropriate license.
TikTok is home to a number of different influencers, who have all kinds of different subject focuses, from makeup and fashion, to cooking, fitness, and more.
There is also a large number of creators who share stock tips and other investment or financial videos to their audience, gaining thousands or even millions of views for their content.
However, where viewers’ finances are concerned, there are some legal considerations too. The Australian Securities and Investments Commission (ASIC) is now warning those content creators that they could face up to five years in jail if they give financial advice without a license.
In an information sheet issued in March 2022, the ASIC said: “When you discuss financial products and services online or promote affiliate links, make sure you understand your legal obligations.”
This included that: “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 license [Australian Financial Services Licence]”
They added that your content needs to be “accurate and balanced” and said that, “if your online post is misleading, you may be breaking the law.”
They also listed a series of case studies that explored what exactly constitutes financial advice under Australian law, and also what is considered misleading information.
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President Biden signs executive order
While these regulations are focused on Australia, there are indications that ‘finfluencers’ around the world, including the U.S., could soon face similar risks.
Earlier in March, in response to the “explosive growth” of cryptocurrencies in recent years, President Biden signed a new executive order that is a “whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology.”
@POTUS‘s Order calls for measures to: -Protect consumers, investors, & businesses -Protect U.S. & global financial stability -Mitigate illicit finance -Promote equitable access -Support responsible innovation -Explore a U.S. Central Bank Digital Currency And more.
— The White House (@WhiteHouse) March 9, 2022
In their statement, they also explained: “The rise in digital assets creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier, but also has substantial implications for consumer protection, financial stability, national security, and climate risk.”
One of the big concerns around financial influencers, and even just influencers broadly, is the risk of ‘pump and dump’ schemes. This is most often a problem with cryptocurrency, where an influencer encourages fans to buy a certain crypto coin or asset, only for the value of it to plummet once early adopters sell.
It’s not clear what this crackdown will have on finance content creators online in the long run, but it looks like restrictions are only set to get tighter in the future.