ASIC Warns of The Risk of Sponsoring ‘Finfluencers’

ASIC Commissioner Cathy Armour has sent a warning to companies and ‘finfluencers’ who are “pumping and dumping” shares in a bid to raise hype about listed companies. Finfluencers are people who use social media as a platform to discuss money – from budgeting to buying a house and investing. Some financial services companies are hiring these finfluencers to spruik their products.

The big concern is that a lot of these finfluencers have amassed large followings on platforms such as YouTube and Instagram, and do not have an Australian Financial Services Licence (AFSL) and are not meeting educational requirements.

“It is important for companies to be aware of these types of misconduct-related risks and their potential unintended consequences arising from finfluencer collaboration”, Armour said in her recent article.

ASIC chair Joe Longo is concerned about consumers turning to influencers for ‘free’ advice, instead of seeking professional investment advice.

The article goes on to explain that ASIC is looking to work with the industry to overcome these challenges.

Cathie Armour, (9th November 2021) “Regulatory risk and finfluencer engagement for company directors,” https://asic.gov.au/about-asic/news-centre/articles/regulatory-risk-and-finfluencer-engagement-for-company-directors/