Calling on social media ‘finfluencers’ to broadcast wealth warnings
Minister of Financial Services Jane hume recently said the federal government would not step in to regulate social media “influencers”.
She said they’re not much different “from the guy in the pub who wants to tell you all about the really good company he’s just invested in – but with a much louder voice.”
“It’s not financial advice, but as it has since taxi drivers started to tip stock marketers, it’s an inevitable part of a financial ecosystem,” she said.
“Some of the information and opinions consumers receive from online forums will be bad. But some will be good. And many of them will better involve the younger generations in investment and financial markets, ”said Senator Hume.
The Australian Securities and Investments Commission (ASIC) is concerned about misinformation and unauthorized investment advice provided online and its impact on the growing cohort of predominantly younger and inexperienced investors.
“Information and advice on social media forums such as Reddit, Facebook and LinkedIn can be contradictory,” says ASIC. “Some companies and product issuers pay promoters to post favorable comments to encourage new traders to invest,” the regulator said.
It is not only the danger that the investments promoted by the “influencers” can have huge price fluctuations, but also the risk that inexperienced investors are victims of scams.
ASIC has registered a 20 percent increase the number of complaints from consumers losing money in cryptocurrency scams between March and May of last year, compared to the same period in 2019.
Michael Duffy, director of the corporate law, organizations and litigation research group at Monash University, said the recent bitcoin drops are a reality check for investors and demonstrate the continuing challenge for governments and regulators.
“The regulation of digital currency as an investment product is fraught with uncertainties, but digital currencies carry considerable investment risk, given that they are not tied to the underlying assets,” said Dr. Duffy. “Their value is based on trust in the cryptocurrency itself, ultimately as a medium of exchange. This confidence can be very variable, ”he says.