The Australian Securities and Investments Commission (ASIC) has set its sights on advertisers in a move to improve transparency for financial consumers.
The Commission has released a consultation paper and draft regulatory guide which provide best practice guidance for the promotion of financial services.
According to Greg Medcraft, Chairman of ASIC, consumers are heavily influenced by advertisements when making a decision to take up financial products and advice services.
“The objective of our guidance is to help promoters and publishers present advertisements that are accurate, balanced and help consumers make decisions that are appropriate for them,” Mr Medcraft said.
The draft regulatory guide sets out a range of requirements designed to ensure financial product and service advertising is not misleading or deceptive.
The proposed guidelines include:
- A requirement that benefits and risks are positioned equally within the advertisement
- A recommendation to avoid terms or phrases that, when used within the industry, have a meaning which is inconsistent with the meaning commonly recognised by consumers (eg: ‘free’, ‘secure’, ‘guaranteed’)
- A requirement that disclaimers or qualifications are contained within the advertisement, not located separately (eg: on a website)
ASIC will also target advertisers who:
- Suggest that an advice service is ‘free’ or ‘low cost’ if, in fact, the consumer would pay for the service indirectly through the fees and costs of any products they are placed in (eg: where adviser commissions are derived from product fees, and these are not rebated back to the consumer)
- Claim that a financial advice service is an ‘independent service’, or describe an advice service or adviser in language that implies independence if this is not the case because all or part of the adviser’s remuneration is derived from the products they recommend, or because there is a relationship between the adviser and a particular product issuer
ASIC is now seeking industry comment on the guidelines. Submissions are due by 25 October with the regulatory guide expected to be released in January next year.
