In other news, Humphrey B. Bear should not promote contracts for
difference, and Spongebob Squarepants should not plug
ASIC's new regulatory guide - RG234: Advertising
Financial Products and Advice Services: Good practice guidance
- makes it clear that celebrities should not endorse or recommend
financial products about which they actually know very little.
The new guide:
brings together from disparate other regulatory guides a number
of principles regarding the promotion of financial
outlines ASIC's developing views on the use of new media
(such as social networking services) for these purposes; and
provides a number of examples and case studies illustrating
ASIC's enforcement practices in the area.
The guide supplements ASIC's other product-specific guidance
(eg. in relation to unlisted property schemes and debentures) and
its guidance on specific issues (eg. using past performance
information and giving forecasts).
Disclaimers and fine print should not be
inconsistent with other parts of the advertisement, and
cannot be used to correct a misleading statement elsewhere in the
advertisement (particularly a headline).
If fees or costs are referred to, a realistic
impression of the overall level of fees and costs
(including indirect fees/costs) should be given.
Apples with apples: if comparisons with other
products are made, they need to be sufficiently similar to justify
the comparison. Comparative returns needs to be current, complete
Statements about past performance must include
the usual disclaimer that they are not indicative of future
performance. Statements about future performance need to
be based on reasonable assumptions and include a statement that
they are uncertain.
Words should not be used in a way that is inconsistent with
common usage, particularly words such as
"free", "secure" and "guaranteed".
Similarly, jargon should be avoided.
Advertisements should be capable of being
understood by the audience likely to be exposed to the
advertisement. Advertising of complex products that are appropriate
for only a limited group of investors should not be targeted at a
Information in an advertisement should be consistent
with any relevant disclosure document (eg. prospectus or
Photographs and images should not contradict
other information in the advertisement or be used to convey a
Advertisements for financial advice should not create
unrealistic expectations of what the service can
The first principle above gives the fundamental premise of this
consumer-focused guide. ASIC is looking for
balance in the promotion of financial products and
services: seeking to ensure that investors are properly informed
when making investment decisions, and are not improperly swayed by
advertising that conveys a misleading impression.
Can I tweet?
The new guide raises the question as to whether some forms of
new media are appropriate to advertising financial products.
Is it possible to promote a financial product in a balanced way,
giving equal prominence to benefits and risks in a 140 character
tweet? Not likely.
Internet banner advertising also needs to be carefully
considered: a prominent but transient headline should not convey a
meaning that requires fine print to explain properly.
ASIC wants both promoters and consumers to be able to keep a
record of an advertisement - this again can be difficult to achieve
with new media.
The more complex the product, the more care is required -
perhaps, ironically inconsistent with the casual nature of new
To whom does the guide apply?
The new guide is relevant to anyone promoting financial products
or services: this includes product issuers and also advisers,
distributors, agents and even publishers where, for example, the
publisher contributes to the content of the advertisement eg.
through an advertorial.
What should issuers/promoters do?
Take a step back: in assessing advertising of financial
products/services, a key issue is the overall impression give by
the advertisement. This needs to take account of the subject
matter, the content, the format, the likely audience, the media
used and the likely effect of the advertisement.
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.
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