ASIC will be paying more attention to advertising in the
financial services sector, and has produced a new guide to help
ASIC has promised greater scrutiny of the financial services
sector's advertising, including online and mobile advertising,
with the release of its new regulatory guide, RG 234 Advertising
financial products and advice services: Good practice guidance, on
The Regulatory Guide is the result of a consultation process
which was kick started with the release of the ASIC Consultation
Paper 167 Advertising financial products and advice services: Good
practice guidance, and comes at a time when ASIC is gearing up its
activity in this area and has new powers:
In the last 18 months or so, 117 advertisements across the
financial services sector have been withdrawn or remedied in
response to concerns about poor practices and potentially
misleading or deceptive conduct.
ASIC can now issue infringement notices and public warning
notices, and civil pecuniary penalties are now up to $1.1 million
While it can bring out the big guns if needed, ASIC says it
plans to work with the industry, starting with a forum in the first
half of this year.
Who should read this?
If you're a promoter of financial products and financial
advice services, you should understand these issues –
that includes product issuers, financial advisers, distributors or
Publishers of promotions about financial products and financial
advice services should also be across these issues.
What does the new Regulatory Guide on advertising cover?
While much of it will be no great surprise to anyone familiar
with the general law on misleading and deceptive conduct, the guide
is a very useful primer both on the general law and the specific
issues that arise in marketing investment and risk products and
financial advice services (general and personal). Additional
guidance will be released for advertising credit products and
There's a very practical focus in the guide, shown in
particular by two things:
its (very welcome) discussion of the specific challenges in
online and mobile advertising, and its frank acknowledgment that
these channels simply might not be suitable for promoting some
products and services, given the difficulty of getting all relevant
information across; and
its use of advertisements that fell foul of the regulator as
What will ASIC be looking at – and how?
As a start, all advertisements should be consistent with
information provided in any related disclosure document, such as a
PDS or prospectus.
ASIC's basic approach will be to look at the
advertisement's overall impression, which can be assessed by
looking at the advertisement's:
the media used to communicate the information; and
ASIC says that it will be looking in particular at
online and mobile advertising;
the way that risk is explained in advertising, particularly
with words such as "guaranteed", "secure",
"free", etc; and
financial services advertising in rural and regional areas,
across all channels.
What are the key things to remember when creating advertising
for financial services and products?
ASIC's guide very usefully sets out the main principles to
remember in this area:
There is no requirement that the promoter intended to mislead
consumers—the relevant question is whether the
advertisement is in fact misleading or likely to mislead.
It is not necessary to show that consumers have actually been
misled—the law prohibits conduct that is likely to
The relevant test is the reaction of an ordinary and reasonable
member of the advertisement's audience—normally
anyone who is neither unusually astute nor unusually gullible.
The audience is not the audience that the promoter would like,
but the audience the advertisement actually reaches.
Consumers cannot be expected to study or revisit an
advertisement—the most important consideration is the
overall impression created by the advertisement when viewed for the
Qualifications of a headline claim must be clear and
prominent—some headline claims are so strong that any
separate qualification will not correct any misleading
If an advertisement is misleading, then it cannot be
cured—a promoter cannot rely on an accurate disclosure
document to undo the effect of a misleading advertisement.
Silence can be misleading or deceptive when it is reasonable
for a consumer to expect disclosure of important
information—silence on important details can render a
statement misleading, even though it is factually correct.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
Persons listed may not be admitted in all states and
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
This part will cover the legal position in relation to promotional materials and misleading and deceptive conduct.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).