Here’s a nutshell guide for what you need to know when advertising your financial products in Australia.
It's useful to note that the approach in Australia has been to include advertising guidelines for ICO’s and crypto assets under an existing regulation; in this case, regulation 234 - advertising financial products and services.
So, as you read, remember that that these guidelines apply to traditional financial products and ICO’s.
And, the Australian Securities and Investments Commission (ASIC) enforces compliance with the guidelines in this article.
In a hurry? Jump ahead.
Regardless of your financial product or service type, clear, accurate and balanced message should be your advertising objective for financial products and services.
The minimum requirement is for you to avoid a misleading and deceptive conduct claim.
Your best practice approach involves you helping consumers make decisions with the content you supply.
So who is covered by the regulation?
Regulation 234 applies to:
Also, distributors and agents are covered by reg 234.
All methods of informing consumers or promoting financial and credit products and services are covered.
So this means - magazines and newspapers, radio, TV, outdoor ads, internet ads, social media, telemarketing, text messages etc.
Statements in Product disclosure Statements and Financial Service Guides are not included in the meaning of advertising.
If your advertisements do not meet ASIC’s good practice guidance, here are the actions ASIC can take:
When testing your advertisement, ASIC encourages you to test that your advertisement:
Below are the specific criteria for good practice advertising of your ICO or crypto assets.
The key word for this best practice guideline is ‘balanced’ - this means your advertisements should give a balanced message about returns, features, benefits and risks of your product. Yes, and this includes your ICO's.
In practical terms, don’t overstate the potential benefits or create unrealistic expectations.
Also, along with benefits, advertisers should include a statement about risks associated with a benefit or about a product generally.
I'm going to use some ICO example because they are not explicitly covered in reg 234.
Example: ICO potential returns
If you are going to advertise an expected rate of return on the sale of a coin, you should also state that the expected return may not arise, and that the investor’s balance may even fall.
Other return, feature, benefit and risk guidelines:
You should make sure that risks about your financial product are clear, not hidden or difficult to understand.
If you have set up software that helps consumers track and purchase cryptocurrency, you should avoid marketing material that makes statements like these:
Refunding customers that have made software purchases from you is a likely consequence if ASIC finds you are in breach of this guideline.
Also, you should be careful not to:
You should avoid any statements about loans for cryptocurrency trading being ‘stress free’ strategies to accelerate your wealth. This is because there are risks involved in gearing to invest in cryptocurrency which would make it unlikely that any strategy like this would be ‘stress-free’.
An advertisement won’t always include in its headline claim all information about the product that’s relevant to a consumer decision.
So, when you have a headline with benefits about an ICO, you’ll need to include qualifications about the benefits as well to balance the information in the headline claim.
Also, your warnings, disclaimers and qualifications should not be inconsistent with other content in your advertisements including headline claims.
Also, you cannot get away with referring a consumer to another website or web page or documents such as a PDS, prospectus or contract - these won’t be sufficient steps to correct a misleading or deceptive headline claim. We know this from the case of the internet company TPG - Australian Competition and Consumer Commission v TPG Internet Pty Ltd .
You’ll need to give consumers a realistic idea of the overall level of fees and costs a consumer is likely to pay.
In practical terms this means, don’t say that there are no fees if there are fees but they are waived only if certain criteria is met.
Also, there’s a difference between fees and costs, so don’t include fees and forget about costs vice versa.
So, this means including the impact of fees and costs on returns for financial products.
Below are some examples.
You should not state that an advice service is ‘free’ or ‘low cost’ if the consumer would pay for the service indirectly through the fees and costs of any financial products.
Under the national credit code, you don’t need to include an interest rate. But, you’ll need to include the rate if the advertisement states the amount of any repayment.
Also, you’ll need to include any fees and charges.
Don’t tell consumers they’ll save on interest for a home loan compared to a competitor if this saving wont apply to all customers.
Other useful guidelines:
A comparison rate helps consumers identify the true cost of a loan.
So, it needs to include the interest rate, fees and charges relating to a loan. This includes an annual fee to access a loan.
If this information is not included, consumers could be mislead.
Also, the comparison rate must not be less prominent in an advertisement than any interest rate or the amount of any repayment.
Below are examples of less prominent comparison rates, and in breach of section 164 of the National Credit Code.
You’ll need to include a warning that the comparison rate is only accurate for the example in the advertisement. And, the warning will need to be in the same form as the comparison rate (e.g. spoke or written form).
For online banner ads - you can include a clear link or reference to the warning. The language should be clear.
Below is guidance for different types of comparisons.
When comparing products, the products should have sufficiently similar features to make the comparison relevant and not misleading.
In practical terms, this means you should not:
Consistent with other parts of reg 234, a comparison of benefits and returns should be accurate, balanced and have a reasonable basis.
This especially includes using terms like ‘high’ and ‘low’ to compare benefits or returns.
Credit ratings should only be advertised to retail clients if the rating is issued by a credit rating agency that’s authorised under its AFS licence to provide financial advice to retail clients.
Ratings may include credit ratings, ratings, recommendations and opinions produced by financial product research houses.
The rating should be properly explained either in the advertisement or by including details where an investor can obtain further information about the rating.
Also, if you are going to use ratings, you’ll need to include this statement:
Ratings are only one factor to be taken into account when deciding whether to invest in a financial product or take up a credit product.
Also, only current ratings should be used.
The award granter should be identified and the award explained, including the currency of the award.
And if the award is granted by someone related to the promoter, this should be mentioned.
If you are referencing past performance, you’ll need a statement like this one:
Past performance is not indicative of future performance.
And for any forecasts, you’ll need reasonable grounds for such representations and they must not be misleading.
Be careful when using these terms: free, secure and guaranteed. You’ll need to take this precaution to avoid situations where you:
In practical terms, if you are issuing a debenture, don’t use the phrase ‘invest with certainty’ and ‘the rate you choose if secured for the term of your investment’.
You should not use these terms:
An example where there’s no independence - a financial advisor that gets commission from the financial products they recommend.
This term should only be used for a service that:
Only genuine endorsements and testimonials are allowed.
Promoters need to consider the characteristics of the audience that will see the ad.
For example, their:
And, while the promoter’s target audience may be different to the actual audience, the actual audience needs to be taken into account.
The key principle for responsible lending is that credit licensees must not enter into a credit contract with a consumer that’s not suitable for them.
This is judged on the consumer’s requirements, objectives and their financial situation.
So, you should be careful with ‘no-doc’ type products, ‘instant’ or very fast approval or even approval with ‘no credit checks’ because these features may not be consistent with the obligations of a responsible lender.
Also, take care when advertising a product is suitable for a particular class e.g. consumers that have been knocked back by other credit providers or students.
These are terms you should not use: ‘guaranteed acceptance’, ‘pre-approved’ because you’ll need to follow an independent assessment when an application comes through.
ASIC stopped an advertisement that said ‘no application refused’ because its misleading, because of responsible lending principles of checking suitability.
Card issuer’s cannot send unsolicited invitations for credit limit increases unless the customer has previously consented to this - National Credit Act, s 133BE-133BF.
Your ad should be simple and easily understood by the audience likely to see it.
If you have a complex product, then you should not advertise if in a limited space like internet benners, 30-second TV ads.
Your ad should be consistent with any disclosure document like a product disclosure statement, financial services guide or prospectus.
A promotional campaign should not contain a guarantee that an interest rate will stay low if the terms in a credit contract state that the interest rate can be raised at any time.
Financial product advertisements must include a statement like this one:
“You should consider the PDS or prospectus in deciding whether to acquire this product” - and indicate where the PDS or prospectus can be obtained - section 734 and section 1018A of the Corporations Act.
Your images should not detract from or reduce the prominence of qualifying statements.
So, in practical terms, you should be careful when using images associated with success, wealth, safety and security.
In practical terms this means...
For a funeral insurance ad - do not use images of an older audience, if a low price will only apply to younger customers.
Keeping things simple is important.
This means, tables, diagrams, graphs, charts and maps should be easy for consumers to understand.
Practical application of this guideline would be keys for complex diagrams and graphs, and time periods that fairly represent the information and do not give skewed outputs.
The key principle here is - don’t create unrealistic expectations about what a service can achieve.
For example, don’t say that an advisor will consider all all relevant products across a market if this won’t occur.
Also, don’t describe an advice service as offering ‘full financial plans if the advisor can only advise on a narrow range of issues.
The same principle applies for not misrepresenting an advisors experience or qualifications.
ASIC has guidance for mass media, internet and outdoor ads.
Let’s start with mass media.
First, mass media includes radio, TV, newspapers, magazines and the internet. It has the capacity to reach a wide audience.
Ads should not be presented as news programs or other programs.
Practically, this means a radio presenter needs to disclose if a promotion is an ad before they read the ad.
Also, this is particularly important in the context of ‘high trust’ environments like blogs or social media blogs.
Warnings and disclaimers need to be read at a speed that’s easy for an average listener to understand. This also applies to telemarketing.
Warnings and disclaimers need to be prominent in film and video ads. And, an average viewer should be able to easily understand any disclaimer or conditions.
Internet ads like webpages, banners, videos on YouTube etc need to allow additional information.
For example, internet banners with strong headline claims need to balance these headlines with information about the risks.
Also, consumers should be able to keep information about disclaimers in case a dispute arises. So you should not just rely on a disclaimer that scrolls by quickly.
Billboards, posters, signs in public venues and aerial display all count as outdoor ads.
This type of advertising may be more appropriate for branding rather than conveying important complex information about a product.
Below is what you need to know about the consequences that may follow for misleading or deceptive conduct.
Below are the factors that ASIC takes into account when assessing if your ad is misleading or deceptive.
ASIC will ask if the ad is:
ASIC will check if the ad:
These legal principles apply:
Examples of things ASIC can do if there is a contravention (and this list is not exhaustive):
ASIC’s approach with depend on the provision that’s been breached.
While primary responsibility for an ad rests with the organisation placing the ads, the publisher is also responsible.
Publishers can defend themselves by claiming they did not know or had no reason to believe the publication would be an offence: section 1044A, Corporations Act and section 12GI(4) ASIC Act.
ASIC expects the following from publishers:
Aggregators or comparison sites have the primary role of comparing or raking products.
Below are the responsibilities of aggregators and comparison sites: