Why Is It Illegal to Give Financial Advice Without a Licence in Australia?

By Ben Northwood, Partner and Financial Adviser – Discover Financial Partners

Imagine This: You walk into a new café and order your favourite flat white. Behind the counter, the barista is friendly, the coffee machine is humming, and everything seems normal until you find out the café doesn’t have a food business licence. Suddenly, that comforting cup of coffee feels a lot riskier. Why? Because licences exist to ensure that businesses meet health, safety, and quality standards. Without them, there’s no accountability, no oversight, and no guarantee that what you’re getting is safe.

Now, think about financial advice. Just like food handling, it’s a service that can have a serious impact on your wellbeing—only in this case, it’s your financial health on the line. This is why it is illegal to give financial advice.

That’s why in Australia, providing financial advice without a licence is not only unethical—it’s illegal.

What Is Considered Financial Advice?

The Australian Securities and Investments Commission (ASIC) defines financial advice as any recommendation or statement intended to influence a person’s financial decisions. This includes:

• Recommending specific investments like shares, managed funds, or property. 

• Advising on superannuation, insurance, or retirement strategies. 

• Suggesting financial products based on someone’s personal circumstances.

Even well-meaning advice from a friend or influencer can cross the legal line if it’s perceived as personal financial guidance.

Why is it Illegal to Give Financial Advice & Why Licensing Matters

To legally provide financial advice in Australia, a person must hold an Australian Financial Services (AFS) licence or be an authorised representative of one. This ensures:

1. Consumer Protection: Licensed advisers are held to strict standards, reducing the risk of poor or harmful advice. 

2. Professional Standards: Advisers must meet education, training, and ethical requirements. 

3. Fraud Prevention: Licensing helps ASIC monitor and prevent scams and misleading conduct.

Fixing the Damage: A Common Part of Our Work

A big part of what we do at Discover Financial Partners is helping clients recover from poor or inappropriate advice given by unlicensed individuals. One common example is property spruiking—where someone with a vested interest in selling property presents themselves as a financial expert. We also often see professionals like accountants, who are highly skilled in tax planning, unintentionally stepping outside their scope by offering investment advice. Even the best accountants will acknowledge that matching investments to a client’s goals, risk profile, and long-term strategy requires a different set of qualifications and licensing.

That’s where licensed financial advisers come in. We ensure that every recommendation is tailored, compliant, and aligned with the client’s full financial picture—not just one piece of it.

The Rise of Social Media “Finfluencers”

In today’s digital world, financial advice is often just a scroll away. Social media platforms are flooded with influencers—sometimes called “finfluencers”—who promote investment ideas, stock tips, or crypto strategies to thousands of followers. But what many people don’t realise is that some of these influencers are not only unlicensed, they may also have hidden motives.

In several high-profile cases, ASIC has exposed influencers who promoted stocks they had already purchased, hoping to profit from the price surge once their followers bought in. This practice—known as “pump and dump”—is not only unethical, it’s illegal. It highlights why it’s so important to question the motivation behind any financial advice you see online. Are they genuinely trying to help, or are they trying to benefit from your actions?

Real-World Impact: Two Client Stories

Sarah, a 42-year-old teacher from Brisbane, followed investment tips from a social media influencer who wasn’t licensed. Within a year, she lost over $30,000 in a high-risk crypto scheme. “I thought I was getting smart financial planning advice,” she said. “But I had no protection when things went wrong.”

In contrast, as a licensed financial planner in Melbourne, all the clients Ben advises have reassurance. “Because I’m licensed, my clients know they’re protected and that I’m accountable,” Ben explains.

Legal Consequences of Unlicensed Advice

Providing financial advice without a licence is a criminal offence under Section 911A of the Corporations Act 2001. Penalties include:

• Fines up to $133,200 for individuals and $1.33 million for corporations. 

• Up to 5 years in prison.

ASIC has increased enforcement, especially against unlicensed advice shared via websites, social media, and cold calls.

How to Check if Your Adviser Is Licensed

Before acting on any financial planning advice, check the adviser’s credentials on the Financial Advisers Register. This simple step can protect you from costly mistakes and ensure your adviser is legally authorised to help.

Final Word from Ben

“As licensed advisers, we don’t just give advice—we take responsibility for it. That means every recommendation we make is backed by training, regulation, and a genuine commitment to our clients’ goals. If someone’s giving you financial advice without a licence, ask yourself: who’s really looking out for your future?”

At Discover Financial Partners, we believe that quality financial advice should always come with accountability, transparency, and trust. If you're unsure about the advice you've received or want to speak with a licensed professional, we're here to help.

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This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances.