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