Finfluencers are currently facing considerable headwinds. Not only are the tax authorities on the lookout for opportunities to boost state revenue by investigating tax evasion among influencers, but the financial regulator BaFin is also taking a closer look. And now, to top it all off, the Federal Court of Justice (BGH) has stirred up the scene with a recent ruling on distance learning.
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Investment Advice by Finfluencers
BaFin recently cleared Finfluencers of the general suspicion of providing (unauthorised) investment advice. In its latest update to the guidance note – Information on the offence of investment advice – BaFin explicitly states that Finfluencers generally do not meet the criteria for investment advice.
(See the blog article by my colleagues Jonas Buckgard and Dr. Paul Schultess for more information.)
However, BaFin appears to be eagerly pursuing actual indications that Finfluencers of all stripes may indeed be providing investment advice. Anyone who finds themselves in BaFin’s sights can expect a friendly, yet no less firm, request to respond.
Financial Coaching
BaFin also seems to take a rather sceptical view of the financial coaching industry. In its article Investing: Top returns through online financial coaching?, the regulator advises caution when it comes to offers such as coaching, mentoring programmes, or workshops. While legitimate and needs-based services can provide real added value, there are no binding standards for the quality, content, or expertise of coaches, mentors or trainers. BaFin therefore advises potential clients to carefully review these offerings in advance.
It is probably no coincidence that BaFin is increasingly investigating providers of such programmes for allegedly offering unauthorised investment advice.
Investment Brokering and Recommendations – Regulatory Pitfalls
Even without offering investment advice, Finfluencers and coaches may be subject to authorisation or notification requirements under financial regulation.
Merely promoting a specific financial instrument to followers or course participants – even without a personalised recommendation – can be regarded by BaFin as an attempt to influence investors to purchase said instrument. If commissions are paid for the resulting transactions, BaFin may conclude that investment brokering is taking place, which requires authorisation.
Passing on investment strategy recommendations or investment recommendations as defined by the European Market Abuse Regulation (EU) 596/2014 (MAR) does not itself require authorisation. However, it must be notified to BaFin and can trigger organisational obligations to avoid conflicts of interest. Breaches may result in fines of up to EUR 50,000.
Caution When Dealing with BaFin Enquiries
Taking a BaFin enquiry lightly could prove to be a grave mistake. Thoughtless statements intended to refute suspicions of unauthorised investment advice may instead indicate investment brokering or liability for investment recommendations. It’s a case of jumping out of the frying pan into the fire.
Coaching as Distance Learning
The Federal Court of Justice has recently opened another front for Finfluencers who offer seminars, coaching, or mentoring programmes.
It ruled that an online mentoring programme called Financial Fitness fell within the scope of the German Distance Learning Protection Act (FernUSG). The decisive factor for the court was the contractual structure of the programme. In its view, it is sufficient if the participant is contractually entitled to ask oral questions to the instructor in order to verify their understanding. The court therefore concluded that the criterion of “supervision of learning success” had been met.
As the programme was not authorised under the Distance Learning Protection Act, the court granted the claimant a full refund of the fees already paid. It also rejected any reduction of the refund based on unjust enrichment from having participated in the programme.
