Finance companies associated with Perth-based property developer, the Nicheliving group, have been taken to task by ASIC for misleading advertising about investment properties.
ASIC has issued infringement notices on Australian Property Alliance (APA) and imposed new licence conditions on the Australian credit licence of Wealth WA (WWA), which provided financial services in the course of the Nicheliving group's primary business, property development and real estate sales.
APA was ordered to pay $40,800 after four infringement notices for misleading advertising were issued by the regulator. The advertisements were published on various websites administered by APA, the Nicheliving Facebook page, YouTube, as well as on television channels 1, 9, 10, 11 and GEM during the period 14 May 2014 to 16 October 2014.
According to ASIC, the advertisements represented that consumers could obtain an investment property from “just $59 per week”.
ASIC was concerned that the advertisements were misleading because they did not disclose the detailed assumptions and qualifications which underpinned a negative gearing investment strategy, requiring the consumer to enter into a mortgage to finance the purchase of the property and to pay an upfront amount of $35,000.
ASIC was also concerned by advertising published by WWA which included headline claims which stated consumers could pay off their mortgages in eight years instead of 30, legally reduce their tax to nil and increase their net worth by $100,000 by investing $59 per week.
“The advertising of credit products and services must be clear, accurate and balanced, particularly in relation to the sale of real estate which may involve borrowing significant sums of money,” ASIC deputy chairman, Peter Kell
“ASIC wants to ensure consumers have a clear understanding of the commitments they are entering into and are not misled by grand claims. We will act against companies where we consider their advertising is potentially misleading or deceptive.”
Both APA and WWA have agreed to engage an independent compliance consultant to review their advertising policies and conduct training to ensure their staff are informed of legal requirements in relation to marketing.