“Finfluencers” and the law – which could include your social media posts

As someone who writes about insurance, online, I have to be conscious that I work in a glass house, so throwing stones is unwise. “Finfluencer” is a neologism for someone commenting on money matters on social media. Some are undoubtedly great, bringing practical money principles to life for their followers in hundreds of pithy little videos.

On the other hand, ASIC are plainly worried about some of the others. We should have no problem with regulators going after people involved in clearly illegal practices such as pump-and-dump share-market scams. There are some less obviously concerning practices which are detailed in ASIC’s paper. The same can apply here. It is possible to breach the law even if you are not being paid to give a recommendation. It’s a handy reminder to check the definition of advice and relevant exemptions.

Section 431C of the amended FMCA details the meaning of financial advice and regulated financial advice.

431C Meaning of financial advice and regulated financial advice
(1) A person gives financial advice if the person—
(a) makes a recommendation or gives an opinion about acquiring or disposing of (or not acquiring or disposing of) a financial advice product; or
(b) makes a recommendation or gives an opinion about switching funds within a managed investment scheme; or
(c) designs an investment plan for a person that—
(i) purports to be based on—
(A) an analysis of the person’s current and future overall financial situation (including investment needs); and
(B) the identification of the person’s investment goals; and
(ii) includes 1 or more recommendations or opinions on how to realise 1 or more of those goals; or
(d) provides financial planning of a kind prescribed by the regulations.
(2) However, a person does not give financial advice merely by doing 1 or more of the things set out in clause 7 of Schedule 5.
(3) Financial advice is regulated financial advice if—
(a) it is given in the ordinary course of a business; and
(b) it is not excluded under any of clauses 8 to 18 of Schedule 5.
(4)Subsections (1) and (3) are subject to a declaration under section 562(1)(gb).
Section 431C: inserted, on 15 March 2021, by section 29 of the Financial Services Legislation Amendment Act 2019 (2019 No 8).
So, as with the Australian situation, you can give regulated financial advice while not being paid. But you will have noted those exclusions. First, the exclusions from clause seven:
7. Exclusions from definition of financial advice
A person does not give financial advice merely by doing 1 or more of the following:
(a) providing factual information (for example, information about the cost or terms and conditions of a financial advice product, or about the procedure for acquiring or disposing of a financial advice product):
(b) carrying out an instruction from a person to acquire or dispose of, or not to acquire or dispose of, a financial advice product for that person:
(c) making a recommendation or giving an opinion about a kind of financial advice product in general rather than a particular financial advice product (for example, an opinion about shares generally rather than shares of a particular company):
(d) recommending that a person obtain financial advice:
(e) passing on financial advice given by another person (unless the person holds out that the financial advice is the person’s own advice):
(f) giving or making available any of the following:
(i) a disclosure document:
(ii) information from a register entry:
(iii)an advertisement referred to in section 89:
(iv)any other document or information that the person is required by law to give or make available:
(v) a document or information prescribed by the regulations:
(g) carrying out a prescribed activity.