How social media is shaking up the finance sector
What is a Finfluencer?
There’s a reason when you write “Finfluencer” in a document the term either comes up with a squiggly red line underneath it or autocorrects it to influencer – it’s not technically a real word. But it’s certainly a real concept. Finance influencers, or finfluencers, are social media personalities specialising in finance. From concepts like investing to paying off debt and everything in between, finfluencers are feeding seemingly unregulated financial advice to Generation Z through social media channels like TikTok and Instagram. What are the legal implications of this new concept and what are the potential benefits?
Legal Implications for Finfluencers
Advice around financial products such as shares, superannuation, bonds, interest etc must come from someone who holds an Australian Financial Services Licence. Finfluencers are thus walking a fine line between unregulated, and potentially illegal advice, and simply just personal opinions and stories. Australian Securities and Investments Commission, ASIC, state that “If a finfluencer chooses to remain unlicensed, and is found to be running a financial services business without having an AFS licence or being an authorised representative of an AFS licensee, they may be in breach of the Corporations Act 2001 (the Act), which carries significant penalties.” The same penalties apply to any organisation that engages with such social media personalities to promote their brand.
Senator The Hon Jane Hume, minister for financial services, has raised her concerns around this growing concept. At a conference in September, Hume stated that “unauthorised advisors are the biggest risk to this industry.” She likened the advice of Finfluencers to taxi drivers giving stock tips.
“It goes without saying that if you make a financial decision that goes drastically wrong based on the musing of a taxi driver or a guy down at the pub or a 16-year-old on TikTok, it shouldn’t be up to the government or indeed the industry to bail you out.”
In saying this, the legal implications still sit very much in a grey area. As there is no regulation for such advice, and social media exists in a digital realm, the legal guidance boil down to “be careful” – for consumers, companies and finfluencers alike.
Finfluencers to promote Open Banking
There are many risks and legal grey areas when it comes to finfluencers. Are there any benefits to this financial presence on social media? Leading fintech and Open Banking platform, Basiq, thinks so.
Basiq can see opportunities for education and growth in Open Banking through the mode of financial influencers on social media. As platforms like TikTok and Instagram, where finfluencers tend to reside, are built to be user friendly and highly consumable, so much information is available at the swipe of a finger. Basiq celebrates finfluencers and the content they make as they have the potential to “drive adoption and comfortability with Open Banking and CDR”. Basiq sees a place for Open Banking on TikTok, and considering this is the next generation of open finance, why shouldn’t there be?
Basiq supports ‘finfluencing’ when it is applied to enhancing a user’s financial literacy and education, not when ‘pump and dump’ schemes or any breaches of the Corporation Act come into play.