Australian Regulatory Update – 21 November 2022

By Jim Bulling and Anabelle Weinberg

1. “Finfluencers” pivot following warnings from ASIC and become authorised to provide general financial product advice

Earlier this year, ASIC put social media “finfluencers” on notice after warning that they could face imprisonment and hefty fines if they do not obtain an AFSL or do not stop promoting financial products online.

In response to ASICs warnings, many “finfluencers” are now signing up to the AFSL regime to operate with confidence and avoid penalties from ASIC. It appears that “finfluencers” are partnering with financial planning firms to become authorised representatives allowing them to provide general financial advice on their platforms.

Just last week another popular “finfluencer” Natasha Etschmann (@tashinvests) has become authorised to provide general financial product advice under an arrangement with a financial planning firm. 

By taking these steps, “finfluencers” will be able to continue posting on their social media accounts to their followings and provide general financial product advice to anyone who accesses their profiles whilst being accountable to ASIC. 

2. APRA proposes enhanced obligations for trustees

APRA has released a discussion paper proposing to replace the existing Prudential Standard SPS 114 Operational Risk Financial Requirement (SPS 114) with enhanced obligations for trustees.

The proposed changes will mean that RSE licensees must guarantee they have access to equitably sourced financial resources which spread the impact fairly across different cohorts of members to respond to, and rectify, the impacts of operational risks.

APRA intends to replace SPS114 with a two-tiered model consisting of:

• a baseline component, to ensure ready access to financial resources to fund the recovery from adverse financial risks or member exit activity; and
• an operational risk component, to spread the impact of operational risk fairly across different cohorts of members. The operational risk component will largely reflect the approach of the existing operational risk financial requirement but with greater flexibility.

The proposals are a response to heightened risks in the external operating environment, such as pandemics, cyber risk and third-party service provider risks.