While the debate still rages over Internet censorship at the hands of the DBCDE, it may be ASIC that lands the first punch in censoring forums and blogs.

The Australian Securities and Investment Commission (ASIC) has released a discussion paper on the need to require Internet Discussion Sites (such as forums and blogs) to hold an Australian Financial Services licence (AFSL) in order to carry posts about financial matters. 

Internet discussion sites (IDSs) are internet websites that provide a place for people who are not financial services professionals to share information, recommendations and opinions about financial products such as shares.

Under the current law, the activities of IDS operators and users may constitute the provision of financial services, for which an Australian Financial Services licence (AFSL) is required. ASIC proposes to update its policy to give specific guidance on which IDSs are likely to need an AFSL. ASIC does not propose to grant IDS operators relief from the financial services licensing and disclosure regimes, meaning operators will need to hold an AFSL unless a pre-existing exemption applies to them.

So far this is just a discussion paper but the language used in the introduction quoted above means that forums, blogs and other social networking sites is that they’re going to may need an AFSL license if it is found that members are discussing financial matters in an ‘advisory manner’.

Information on who needs an AFSL is sketchy even to trained lawyers and this discussion paper makes a significant jump in the concept of who is offering financial services.  It’s beyond the scope of my financial resources to engage a lawyer for advice on this matter and my own legal training is insufficient to cover something this complex – I’ll leave it to my readership to agree or disagree with my reading of the terms above. 

By the term ‘internet discussion sites’ (IDSs), we mean internet websites, such as web-based bulletin boards, ‘blogs’, or chat rooms, that provide a forum for people who are not financial services professionals to display information, recommendations and opinions about financial products.

My interpretation so far is that online communication will now be subject to the same rules that govern commercial communication, even when that conversation is between private citizens. For example, if HotBabe445 posted that she was thinking about buying Telstra shares and BigDaddyXOXO told her not to on the basis that “Telstra sucks”, BigDaddyXOXO may be required to hold an AFSL as, according to the discussion paper,

[...]informal commentary about financial products posted to an IDS may amount to financial product advice.

Slightly more worrying is that the person who runs the forum on which BigDaddyXOXO made his post may need an AFSL as well, regardless of the nature of the forum.

Operators who do not post comments containing financial product advice themselves, but who authorise or arrange for others to post such comments, may also require a licence. This is because authorising or arranging for a thing to be done is generally treated in the same way as actually doing the thing under the Corporations Act.

The exception to this situation would be if the person running the forum had no ability to modify the post or in no way tampered with the post itself.

Of course, confusion sets in with an isolated section that adds an additional restriction on the application of the AFSL.

We think that the current law sets an appropriate line between those who need a licence, and those who don’t, and that there are no policy grounds for ASIC to alter this by granting special relief to IDS operators. Therefore, we consider that if:

(a) a person is providing financial product advice through an IDS (whether as the IDS operator or otherwise); and

(b) the advice forms part of a financial services business,

that person should, like any other provider of financial product advice, hold an AFS licence…

While this puts a dousing on the fire I’ve lit earlier in the article, the bolded requirement is practically meaningless given that the 2001 changes to licensing removed the need for the advice to be part of a business.

The FSR Act replaced the concept of carrying on an ‘investment advice business’ with the concept of carrying on a business of ‘providing financial product advice’…

When taken within the context of the Rudd government’s overall Internet policy base, this is a relatively scary situation. The line between the formal and the informal is being drawn too far into the ‘casual conversation’ zone and risks alienating Australians from the streamlined online participation more modernised countries enjoy. 

Though I may be wrong, comments are appreciated.

It was only a matter of time, but it’s finally happened. The DBCDE has alienated enough of its private sector partners that one of them has leaked the blacklist. 

Asher Moses from the SMH posted an article about the leaking mere hours ago.

The EFA has promptly responded that this is a ‘wake up call’ to anyone concerned with secret government censorship. It’s also a wake up call to child protection agencies now that the ACMA has allowed a list containing links of child abuse to be published to the world. Failure.

It’s unfortunate that not a week after Senator Conroy asked Australians to ‘have faith’ in his department and the ACMA, proof arises that his attempts at child protection are a facade and that a significant proportion of the blacklist are in fact gambling sites or, in some cases, harmless MySpace and YouTube profiles. The site of a Queensland dentist was also put on the blacklist though no reasons for this have been forthcoming.

The ACMA has already come out threatening 10 years jail to any Australian that publishes (snip! -ed) the blacklist in an effort to control the blunder. 

Who leaked the Blacklist?

Until recently there was only a limited number of people with access to the blacklist, including ACMA officials, DBCDE staff and official Internet Filter vendors. Recently, however, the DBCDE opened the gates to the blacklist by accepting small home run businesses into the ISP filter trial. 

The DBCDE failed to heed warnings that this was a serious security risk and proceeded anyway.

So who has the DBCDE specifically alienated? Besides Telstra and all but one of Australia’s largest ISPs, the DBCDE hasn’t made itself popular with many PC based filtering vendors that were either shut out of the process entirely or, in the case of Optenet, booted out of the Net Alert scheme with no public reason given.

Now that the DBCDE has included 6 more companies, including a home-run ‘mum and dad’ operation, it’s anyone’s game, though the security around tech2u.com.au is probably not so crash hot that some bored script-kiddy couldn’t have lifted the list without much problem.

In the meantime, Net Alert Filter vendors are literally preparing for raids by Federal Police after hearing about the Blacklist being leaked.

The question now remains, will the ACMA take legal action against, or attempt to blacklist the twitter profiles of people who have linked the blacklist on twitter?