Australian creators who offer financial advice without a license can face five years in prison, the country's government said.
Creators known as "finfluencers" make content about finances, from budgeting tips to explainers on complex investments. Some use their platforms to promote investing in certain stocks or assets, promising their followers lofty returns. Many flex their luxurious lifestyles on Instagram and TikTok, and credit their wealth to their investing savvy.
The Australian government is cracking down on the creators who offer financial advice without a federally-issued license. In an information sheet released last month, the Australian Securities and Investments Commission (ASIC) warned that influencers who continue to offer unlicensed financial services can be penalized with hefty fines and up to five years of jail time.
"ASIC monitors select online financial discussion by influencers who feature or promote financial products for any misleading or deceptive representations or unlicensed financial services," the ASIC information sheet states.
Profiting from affiliate links that direct followers to online brokers may also count as providing an unlicensed financial service, ASIC stated. Influencers are also instructed to ensure that their content is "accurate and balanced."
"If your online post is misleading, you may be breaking the law," the sheet continued.
If your online post is misleading, you may be breaking the law
-the Australian Securities and Investments Commission (ASIC)
Younger people can be especially swayed by financial influencers. An ASIC survey conducted last year found that 64 percent of Australians who followed financial influencers reported changing their behavior because of online posts.
Instagram creator Tyson Scholz, who posts as asxwolf_ts, is already in hot water with ASIC. The group is suing the self-described "wolf trader" for allegedly running an unlicensed financial services business by offering training courses on the Australian stock market.
ASIC seeks orders that will prohibit Scholz from doling out advice and promoting any financial services business. ASIC also wants to ban Scholz from "receiving, soliciting, transferring or disposing of customer funds" received from his financial advice.
Scholz's representatives did not immediately respond to request for comment. His lawyers are contesting ASIC's suit, the Guardian reports, and his Instagram account is now private.
"Think about your content carefully and whether you are providing unlicensed financial services, such as providing financial product advice or dealing by arranging," the ASIC sheet urged influencers. "Seek legal advice if you are unsure."