The Securities Commission Malaysia (SC) has implemented guidelines that have been in effect since November 1 to regulate the advertising of capital market products and related services, in response to the increasing number of local financial influencers (finfluencers) on social media.
The guidelines were issued in 2020 but have been updated to ensure that influencers who provide various financial and investment advice adhere to the same standards as those licensed under securities laws.
For example, they are now prohibited from promoting capital market products and related services including financial planning unless they have a license with the SC. If they fail to obtain a license, they can be fined up to RM10 million or imprisoned for up to 10 years or both.
However, some exemptions are allowed by the SC. For example, the dissemination of factual information for educational purposes is allowed as long as the information is not likely to influence a person to act on the product. Both influencers will need to clearly state that the product being discussed is an advertisement, unlike the current practice.
With these guidelines, influencers in Malaysia stand on the same footing as influencers in Western countries who are also required to disclose that they advertise financial and investment-related products. In the United States, celebrities such as Kim Kardashian, Lindsay Lohan and Jake Paul were fined millions of dollars for not disclosing that they were paid to advertise crypto products a few years ago.
