This is the second part of a blog series about the ways to keep your marketing material from being misleading or deceptive.  Read the first blog here .

Warnings, disclaimers and qualifications

While ASIC and other regulators realise that an advertisement's headline claim will not necessarily carry all relevant information with it, the greater the amount of qualification required to balance that headline claim, the more prominent and proximate to the headline claim it should be.  ASIC and the courts will always consider the overall impression of the material.

Tip 5:

Consider whether your disclaimers are proximate and prominent enough to the headline statements in your marketing to be easily found and absorbed at the same time.

Words to avoid

'Independent', 'unbiased', 'impartial', and other words with similar meaning, are prohibited under the Corporations Act and the credit legislation unless the user receives NO commission or other volume-based remuneration, or any gifts or benefits from a financial product issuer that might be expected to influence its advice.  This is a high bar to leap.  Contravening this requirement is an offence.

'Bank', 'stockbroker', 'insurance broker': these words require particular authorisation to use from APRA (in the case of 'bank') and ASIC (in the case of stock, insurance or futures brokers).

'Free': this word must be used with particular care to avoid the risk of giving a misleading impression.  A service is not free if it is subsidised through other charges.  Is advice 'free' if it is paid for out of fees and costs of financial products clients are placed in as a result of the advice?  If there are qualifying criteria, this must be disclosed.  Is the offering free to existing and new customers?

'Safe', 'Secure', 'Guaranteed': if you don't intend to cover any loss your client may incur, then avoid these words that promise that you will.

'Simple': ASIC considers financial investment to be complicated and is wary that simple solutions are actually ignoring relevant considerations.

Tip 6:

Develop standard ways of describing your business and ensure that all customer staff know what they are.

Misleading and deceptive conduct

Financial products are frequently complex and difficult to understand, and their benefits, being linked to future events such as market performance, uncertain.  Financial services and credit providers frequently, therefore, fall foul of the prohibition on false or misleading representations in the Australian Consumer Law.

Innocent puffery or misleading representation

In the competition for potential clients' attention, the search is always on for words that carry the greatest power.  These choices should be made with care and you need to consider whether your marketing approach creates expectations that cannot be met, or indicates a level of risk (or conversely security) that may not reflect your product.

For example, ASIC took action against a bank that advertised an 'everyday savings account' but had features that, in fact, made it less flexible than the name implied and more suitable for long term saving. 

Furthermore, ASIC points out in its Regulatory Guide 234 (Advertising financial products and services: good practice guidance) that any comparison of benefits or returns should be accurate and balanced and have a reasonable basis.  Generally, the more specific a comparison, the greater the risk, but even broad terms like 'high' or 'low' can mislead if the comparison is not of an appropriate like-for-like basis, or the outcome will only be gained in certain situations which are not explained.

Tip 7:

Ensure you have evidence to back up every claim you make about your product.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.