Australia: ASIC Focuses on Advertising of Financial Products and Services - Advertisers Beware

Last Updated: 21 March 2012
Article by Harry New

ASIC is sending a message that it is prepared to take decisive action against financial services industry participants who create and publish misleading advertisements. Since July 2010, ASIC's actions have resulted in 117 advertisements across the financial services sector being withdrawn or remedied in response to concerns about poor practices and potentially misleading and deceptive conduct. ASIC has stated that it will now aim for stronger penalties than it has traditionally sought in the past. The penalties for making false or misleading statements can range from minor infringement notices to imprisonment.


In February 2012, ASIC released Regulatory Guide 234 Advertising financial products and advice services: Good practice guidance (RG 234). The purpose of RG 234 is to provide promoters of financial products (e.g. product issuers, financial advisers, distributors, agents) and publishers (e.g. printed media, television, internet etc) guidance on how to comply with their legal obligation not make false or misleading statements (ASIC cites 9 legislative provisions which it can use to take action against potentially false and misleading conduct).

RG234 applies to the advertising of all types of financial services and financial products including investment products, risk products, non-cash payment facilities and credit facilities (although RG234 contemplates an additional guide being issued for credit products and services). This includes advertisements for advisory services (both general and personal advice).

RG 234 covers:

  • Good practice guidance on advertising generally;
  • Media specific guidance for advertisers using different types of media (e.g. mass media, audio advertisements,film and video, internet or outdoor advertising);
  • The responsibility of publishers and media outlets for ensuring that advertisements are not misleading and deceptive; and
  • ASIC's regulatory powers. ASIC has an extensive range of powers to investigate and enforce behaviour that it considers to be misleading and deceptive.

What this means to you?

Some may argue that ASIC's approach to financial product and service advertising is an implicit acknowledgement that investors do not read disclosure documents and simply buy products and services on the basis of advertisements which are not by definition designed to fully inform potential investors.

Whether or not you agree with ASIC's approach, it is clear that ASIC is taking a hard line on disclosure (this is reinforced by other recent product specific disclosure guidance that has been issued by ASIC).

This means that financial services providers must review all existing and future marketing material (and any policies in place in relation to marketing) to ensure compliance with ASIC's guidelines. Care must also be taken in considering whether to advertise on new forms of media such as Twitter where character limits may make balanced disclosure prohibitive (including any required warnings).

When is a statement misleading or deceptive?

A statement or representation in advertising or promotional material will be misleading and deceptive if it creates a misleading impression in the mind of a consumer irrespective of whether the maker of the statement or representation intended to mislead or deceive or whether or not the consumer was actually deceived.

RG 234 provides that in assessing whether a statement or representation is misleading and deceptive:

  • 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.
  • Consumers cannot be expected to study or revisit an advertisement. Accordingly, the most important consideration is the overall impression created by the advertisement when viewed for the first time. Sometimes the headline claims are so strong and prominent so that separate qualification and disclaimer information would not be sufficient to correct the misleading impression.
  • Whether a particular statement is misleading or deceptive will depend on all circumstances of the particular case and the context in which the statement is made. For example, the Corporations Act specifies that if a person makes representations about future matters without reasonable grounds, those representations will be taken to be misleading.
  • Generally, if an advertisement is misleading, then it cannot be cured—a promoter cannot rely on an accurate disclosure document such as a product disclosure statement 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.

In determining whether an advertisement is misleading or deceptive, ASIC will consider the overall impression given by the advertisement including the subject, content and format of the advertisement, the audience for the advertisement, the media used to communicate the information and the likely effect of the advertisement.

Good practice guidance for all media

RG 234 states that, as a matter of general principle, advertisements should give balanced information so that consumers can understand the nature of the financial product or service being advertised. Some of the key dos and don'ts contained in the guide are summarised below.

Topic Do Don't Examples of potentially misleading and deceptive conduct
Returns, benefits and risks
  • Give a balanced message about return, risks and benefits
  • Include a prominent statement about risks of the product
  • Clearly explain assumptions made in predicting return or benefit
  • Mutually exclusive benefits should be clearly stated
  • Include a prominent statement that benefits or returns may not be available if circumstances change and highlight the types of change which may occur
  • Benefits and returns should be quoted net of fees and the effect of fees and costs on returns should be clearly stated
  • Risk disclosure should be prominent and not hidden
  • High risk products such as CFDs and other derivatives and products which have unusual risk factors should highlight special risk factors (e.g. margin calls) which may not be apparent to investors
  • Overstate potential benefits and returns or create unrealistic expectations by giving prominence to benefits
  • Make claims about features or benefits which are not reasonably expected
  • to be available to consumers
  • Make open ended promises about benefits if a change in circumstances will make the statement misleading
  • Generally, product issuers should not make claims that they are fully insured or guaranteed against downside risks unless this is actually the case
  • When an expected rate of return is advertised for an investment product, the risk of that return not being achieved and the investment reducing in value must be included in the advertisement
  • If an insurer advertises that its insurance is offered at the lowest cost available and it does not clearly note the strong possibility that this could change if the market is competitive
  • The use of advertising such as 'Options trading is easy', 'returns of 5%-10%
  • per month', 'build personal wealth with low risk trading strategies' and 'safely harness the leverage power of CFDs' for high risk products
Warnings, disclaimers, qualifications and fine print
  • If the headline claim makes strong representations about benefits and returns, a prominent warning should be included
  • Warnings should be effective to convey key information on a first viewing of the advertisement
  • Warnings should be in the same format as the main body of the advertisement. However, statutory warning required by law (e.g. the general
  • advice warning) does need to be in the same format as the main body of the
  • advertisement
  • Qualifications to the headline statement should be made at the same time as
  • that statement and should not change the meaning of the headline statement
  • Include warnings which are inconsistent with other parts of the advertisement
  • Place warnings in fine print, in dense block text, around other content which could be distracting or, in the context of television of computer
  • advertisement, only shown for a brief period of time
  • Refer to additional information in other documents such as a webpage or PDS
  • to correct misleading disclosure in an advertisement
  • A superannuation fund advertises a low administration fee of $104 p.a. It is acceptable to qualify the statement with 'other fees and charges apply – refer to our PDS' but it is not acceptable to merely state 'refer to our PDS'
  • Online advertising of insurance products which appeared unqualified but were in fact subject to conditions. Qualifications should be included in same banner advertisement
Fees and costs
  • Fees should give a realistic impression of overall fees and costs a consumer is likely to pay.
  • Effect of fees on returns should be clearly stated. Factors requiring disclosure may include net returns, maximum fees payable if the fees are variable, the existence of undeducted fees when calculating net returns, multiple fee options, entry and exit fees
  • State that a product has only one fee or is fee free if consumers are likely to incur third party costs in acquiring the investment. ASIC assumes that investors do not understand the distinction between a fee of the product issuer and a third party cost.
  • Suggest that financial advice is free or low costs if in fact the consumer would pay for the advice indirectly by way of a commission to advisers
  • A superannuation fund advertised that its members would pay 'one low fee', but didn't mention that other costs or charges would also apply
  • A basic deposit product advertised as 'fee free' where there was a limit on the number of free transaction on the account, without qualification
  • Comparisons should only be made between products with similar features
  • Comparisons showing differences over time should ensure that the differences remain accurate and relevant over a reasonable time period
  • Comparisons between returns should clearly highlight any key assumptions
  • Only use credit ratings from a licensed credit rating agency in advertisements
  • Ratings should be properly explained in the advertisement or by reference to the relevant document for additional information
  • When mentioning awards the year of the award should be made clear
  • Compare only one feature of financial products and ignore other features.
  • For example, it is misleading to highlight that an insurance product has lower costs than another product and not highlight the difference between the level of cover
  • Use high or low to compare level of benefits and returns if the assumptions
  • underlying those comparisons are not explained
  • It is not good practice to advertise that a debenture rate is better than a bank term deposit rate as the two products have very different risk profiles
  • Using the statement 'Best Investment Product of the Year Award' without and explanation of who granted the award and any relationship with the product issuer
Past performance and forecast
  • Must be clear that past performance is not indicative of future performance
  • Information on past performance should comply with ASIC's regulatory guide 53
  • Forecast information needs to disclose a reasonable basis and comply with the Corporations Act and ASIC's regulatory guide 170
  • A fund published an advertisement stating that it was 'the best performing of all funds sold in Australia over 15 years'
Use of certain terms and phrase
  • Take care when using words with strong connotations such as "free", "guaranteed" etc which could be misleading if used in the inappropriate context. For example, ASIC considers that a Bank which uses the term "everyday savings" to describe an account as misleading where the account has high fees and low level of withdrawal flexibility
  • Use terms with strong connotations to create unrealistic expectations, indicate a certain level of security or protection which does not exist. E.g. debentures advertising "invest with certainty"
  • Use industry jargon or technical language unless the advertisement is targeted towards a specific group
  • Use restricted terminology such as "independent", "impartial", "unbiased", "stockbroker", "shareholder", "insurance broker" or "general insurance broker" otherwise than in accordance with the Corporations Act
  • Use false endorsements or testimonials
  • A debenture issuer used phrase 'invest with certainty' and 'The rate you choose is secured for the term of your investment
  • An option trader marketed share trading software with 'Writing covered calls is the same as shares in rental or renting real estate'
  • A celebrity should not claim that they are satisfied with a product if they actually know very little about the product
Target audience
  • Consider the characteristics of the actual audience that is likely to see the advertisement and their level of financial literacy in determining whether or not information is adequate
  • Ensure that the advertisement is sufficiently simply to be understood by the actual audience
  • Target a wide audience when the product would only be adequate for a limited
  • group of people (e.g. targeting complex structured products to elderly investors with limited financial knowledge)
  • Rely on third party (e.g. a financial advisor) to correct knowledge gaps and misleading disclosure in advertisements
  • An advertisement of a complex financial product might be appropriate for readers of a specialist publication but not for general television and newspaper readers
Consistency with disclosure documents
  • Advertisements should be consistent with existing disclosure documents
  • Disclose key disclosures in disclosure documents
  • Require consumers to consider a PDS or prospectus when deciding whether to acquire the product and indicating where and how the PDS or prospectus can be obtained
  • Rely on consumers reviewing disclosure documents to correct any misleading statements
  • An issuer of capital protected products and structured products advertised that the units provided investors with tax deductible interest expenses but in PDS recommended that independent advice be obtained
Photographs, diagrams, images and examples
  • Ensure that graphics are not misleading
  • Present tables, charts and diagrams in an easy to understand manner
  • Use graphics to contradict or reduce the prominence of qualifications
  • An advertisement with an image which suggests that a mining business is at a more advanced stage that it actually is
Nature and scope of advice
  • Create unrealistic expectations of what the service can achieve
  • Mislead as to the nature of the financial adviser's experience or qualifications
  • Where a financial adviser has gained experience in a different industry sector and advertisement for the adviser should be clear about where the adviser gained their experience

Media-specific guidanc

RG 234 also provides good practice guidance to help promoters develop advertisements for specific media including: mass media such as radio, television, newspapers and magazines; Internet advertising; and outdoor advertising. This guidance is summarised in the table below

Media type Guidance
Mass Media e.g. radio, television, newspapers, magazines and the internet
  • Mass media has the capacity to reach a wide audience. Promoters should onsider the characteristics of the actual audience that is likely to see the advertisement (e.g. their financial literacy, knowledge, demographics) and whether the advertisement is accurate, balanced and helpful for that audience
  • Clear demarcation between advertising and program content should be made so that the distinction is readily apparent to consumers
  • Advertisements should not be presented as news programs or other programs
Audio advertisements e.g. radio or telemarketin
  • Where warnings or disclaimers are used in audio advertisements, they should be read at a speed that is easy for an average listener to understand
Film and video advertisement
  • Warnings or disclaimers are used in film and video advertisements, should be prominent despite the distractions
  • An average viewer should easily understand any disclaimer or conditions on the first viewing of an advertisement
Internet advertising e.g. webpages, banners, video streaming (e.g. Youtube), social networking and microblogging (e.g. twitter)
  • As with other forms of advertising, promoters should consider the overall impression created by the advertisement when viewed for the first time. This means that if internet banner advertisement makes a strong headline statement about the financial product, the relevant disclaimers and assumptions should be included on the banner rather than on the webpage the banner links to
  • Scrolling disclaimers and qualification should move at a speed that allows users to easily view the disclaimer
  • Carefully consider the appropriateness of some new media channels if content limitations mean that there is insufficient space to provide balanced information
Outdoor advertising
  • Outdoor advertising may be better suited to promoting brand or product recognition, rather than conveying more complex information about a financial product

Guidance for publishers and media outlets

While the primary responsibility for advertising material rests with the organisation placing the advertisement, ASIC considers that publishers and media outlets may also have some responsibility for content. ASIC encourages publishers and media outlets who deal with advertisements for financial products and advice services to:

  • understand their responsibilities when publishing advertisements; and
  • refuse to publish, or cease publishing, an advertisement if ASIC tells them the advertisement is the subject of regulatory action (e.g. a stop order or public warning notice). ASIC will assist publishers by making this information available.

What can ASIC do to you if you breach the law?

ASIC has a wide range of powers to take action for dealing with breaches of the misleading and deceptive conduct provisions, including:

  • exercising information gathering powers before considering regulatory action;
  • seeking an injunction to stop the advertisement;
  • issuing a stop order on related disclosure documents;
  • initiating a compensation claim or seeking an order to redress for losses by investors;
  • accepting an enforceable undertaking;
  • applying for punitive orders requiring corrections;
  • issuing an infringement notice or a public warning notice;
  • seeking a civil penalty, applying for a community service or probation order or initiating criminal charges; and
  • suspending or cancelling an AFSL or making a banning order.

Our Financial Services team can assist you with any queries in relation to financial product advertising and promotion.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

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”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions