FMA releases guide for ‘finfluencers’

The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – has released a guide to talking about money online following concerns some social media influencers and bloggers may be straying into regulated financial advice.

Rob Everett, FMA Chief Executive, said the new guide is primarily intended for social media influencers but also contains useful tips for consumers when they come across someone providing financial commentary on social media.

“Many people now offer their thoughts and perspectives on all sorts of financial matters and some have built strong followings,” Mr Everett said.

“It’s great to see more people taking an interest and talking about financial matters online, helping others get more familiar with financial products. However, influencers do not want to find themselves caught offering advice they’re not qualified or authorised to give. It’s also important for consumers to be wary of taking an influencer’s recommendation that might not be suitable for them.”

The new guide emphasises that talking about money or investing can sometimes cross over into providing financial advice, for which you are required to have a licence from the FMA.

Under the new financial advice law that took effect in March 2021, anyone who gives regulated financial advice to retail clients (everyday consumers) must either hold, or operate under, a Financial Advice Provider licence. All providers of financial advice are subject to a Code of Conduct which requires them to act with integrity and place the interests of their clients first.

The new guide includes examples of where discussion about financial matters might cross the line into regulated financial advice.

“It’s usually fine to talk about financial matters online as long as you keep it general,” Mr Everett said. “When you start getting into recommending particular products, like specific funds, stocks or insurance, or telling individuals what to do, that’s probably regulated financial advice.

“We’re also reminding influencers to be wary of promoting high risk products like cryptocurrency and derivatives. Not only do these assets have a high risk of people losing money, they’re also often used as bait in scams.”

Tips for consumers

  • Be wary of what you see online. Some influencers are paid to promote financial products or services. This should be properly disclosed to you – but may not always be.
  • Some products promoted online – particularly cryptocurrencies (such as Bitcoin) and derivatives can be very high risk and they’re often not suitable for general investors. Be aware that online financial content attracts scammers, including ‘scam bots’.
  • If in doubt, professional financial advice from a licensed financial advice provider is likely to be a good idea.
  • If you think someone is improperly giving financial advice online, then let the FMA know.

The guide says influencers should follow social media best practice by disclosing all paid and/or gifted posts (in line with Advertising Standards Authority code), moderating comments and acting responsibly (especially with vulnerable consumers).

The participation of retail investors had increased significantly over the past 18 months and social media was a component of that, said Mr Everett. The FMA had also released guides on market manipulation and insider trading to help investors understand the rules.

View a guide to talking about money online.

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