ASIC has sent a strong message to the financial services industry with regard to false advertising, while fining one company $10,000.
Property Capital has paid a $10,200 penalty to comply with an ASIC infringement notice after making potentially misleading statements about ‘ASIC approved’ financial products.
Tasmania regional commissioner Chris Green told Australian Broker TV
ASIC “actively monitors” advertising in the financial services industry and takes action when necessary.
“Advertising plays a crucial role in consumer decisions about financial products, and as such advertising is a focus of ASIC.”
ASIC Deputy Chairman Peter Kell said that SMSF
Property Capital moved quickly to remove the advertising once contacted by ASIC. He added that the penalty should serve as a warning to anyone advertising financial products.
“It is crucial that consumers are not misled about the level of risk associated with any investment,” said Kell.
“ASIC takes the misuse of language such as ‘ASIC endorsed’ or ‘ASIC approved’ very seriously, especially in the area of SMSF
s. Creating a false impression of the level of regulatory approval for investments can lead to consumers making poor decisions.
“Providing accurate information that does not mislead is fundamental to the operation of a fair and efficient market,” he said.
Whenever claims are made in advertising it’s important those claims are accurately supported by evidence, said Green.
“For example, if a product is advertised as ‘free’, it can’t have any hidden costs or transaction fees or anything like that, otherwise it will be in danger of being misleading.
“Brokers also need to take particular care around claims about consumers getting projected savings when those savings are not yet evident.
Franchise Mortgage Choice was last month charged $30,600 in penalties for three charges of misleading advertising for using projected savings calculations in an advertisement.
“It is also important that an advertisement contains balanced information to ensure that the ad gives an overall impression that is realistic about the product or the service. For example, a particular product may be cheap, but it also may have strict limitations or extra costs and all of that needs to be reflected in the advertisement.
“My best advice to brokers is to seek robust legal and compliance advice before publishing advertisements. We have issued guidance which contains real examples from the credit industry where brokers and credit advisers have tripped up with misleading advertising so if brokers and their advisers read our guidance they may be able to learn from the mistakes of others.”
to watch the full interview with Chris Green.