Social media influencers in Australia now face the risk of jail time if they share tips on investing in the stock market or other financial assets.
The regulatory authority – The Australian Securities and Investments Commission (ASIC) – in a new information sheet has now said that in order to give such tips, individuals need to obtain a valid license.
This regulation comes after a survey conducted by the ASIC found that a third of the 18-21 age group followed financial influencers. The survey also found that 64% of youngsters in the country also changed their spending habits under the influence of these trendsetters. BBC quoted ASIC commissioner Cathie Armour saying that not only do the influencers need to follow existing regulations so that investors don’t unwitting suffer losses, but also to safeguard them from punishment.
According to the ASIC, the maximum punishment can be as high as up to five years of imprisonment.
According to this information sheet, budgeting tips do not come under regulation. It also gives explicit warnings regarding making outrageous and misleading statements about financial products.
The information sheet numbered INFO 269 said that the rules will also be applicable for registered financial services companies who employ influencers for propagating their products.
It warned that providing financial product advice or arranging their followers to deal in a financial product without a valid AFS license may be deemed illegal. Further projecting unbalanced opinions or inaccurate information in their content will also amount to breaking the law.
The information notes detailed hypothetical multiple case studies that can be deemed illegal.
It suggests seeking legal advice if individuals are unsure of their obligations or have any ambiguity if their content is in violation of laws or not.