Thanks to social media and smart phones, it’s never been easier to create content to promote your business. But there are strict rules that relate to the advertising of financial products and services and it can be easier than you think to step over the line.
Anyone who has tried to sell a financial product will be familiar with those annoying disclaimers that have to go on pretty much every piece of marketing or advertising. But did you know there’s actually a lot more to misleading and deceptive conduct than just forgetting to put some fine print at the bottom of your ad.
Test your knowledge
Test your knowledge with these three examples of financial marketing to see if you understand your obligations. (You’ll find the answers at the bottom of this page).
1. A mortgage broking firm has updated their website. At the top of the page, under a smiling picture of the entire team, is the following statement: “When it comes to mortgages, nobody does it better than us. We take care of all the paperwork and will get your loan approved.”
Is there anything wrong with this statement?
2. A licensed financial adviser creates a Facebook ad to encourage people to sort out their financial affairs before the end of the calendar year. The ad says that anyone who books an appointment with the financial adviser for a review of their superannuation before Christmas will receive a free Christmas ham. When a user clicks on the ad, they are taken to the adviser’s website where there is an online appointment booking form. At the bottom of this page is a small line of text that says: “Some conditions apply, click here to learn more.” The ‘click here’ links to another page full of fine print, including the fact that the Christmas ham is only available to the first two customers who book an appointment.
Given that the adviser has included the terms of the deal, do you think their Facebook advertisement is misleading?
3. An insurance broker wants to increase sales of income protection policies among small business clients, so they put together a blog and a series of social media posts to promote the product. The broker does a quick Google search for an image of a ‘small business owner’ and finds a picture they like of a young man in a hard hat on a construction site. The broker puts the image on the blog and uses it on the social media posts. The headline on the blog and the posts reads: “Income protection for just $1* a day”. In the disclaimer at the bottom of the blog and the ads, the broker notes that the $1 a day quotation is based on a woman working in a white-collar occupation.
Has the broker done anything wrong?
How did you go?
There is a big difference between ‘will’ and ‘may’. By saying that the firm ‘will’ get the client’s loan approved, the implication is that it is guaranteed that the client’s loan will be approved, no matter what. But given that the firm is not the actual lender, they do not have the power to make this guarantee. ASIC’s guidance states that advertisements for a financial advice service should not create unrealistic expectations about what the service can achieve. Even if the intention of the broking firm is to communicate their service (in this case, that they do loan applications), there is a high likelihood that a potential client would be misled by this statement.
Although the customer is seemingly only being misled about the likelihood of their receiving a free Christmas ham, this is still likely to be considered misleading advertising, because the advertiser has not made it clear upfront that conditions apply. According to ASIC, consumers should not need to go to another website (or another page of the website) to correct a misleading impression. Such behaviour may not warrant a fine in this particular case, but could put the adviser on the radar of the regulator.
There are a few things to be aware of here. Firstly, social media and blogs that relate to your business or a service you provide, or are shared on your business page, are still captured under the rules relating to financial advertising. Next, although the disclaimer specifies that the advertised cost of $1 a day is based on a quote for a white-collar woman, the imagery used implies the offer is for blue-collar men. ASIC says that the use of terms such as ‘conditions apply’ or ‘find out if you qualify’ may not always be sufficient to warn consumers that the advertised product may not be suitable for them, or made available to them, depending on the nature of the product and the distribution of the advertising campaign. By the way, the broker has probably also breached copyright rules by using an image they downloaded from Google. You should always use your own images or those that you purchase or license through a stock photo agency.
The clear takeaway from the regulatory guide is that advertisements for financial and credit products and advice services must give clear, accurate and balanced messages.
Advertising financial products and services: obligations and ASIC’s expectations
Armed with a mix of traditional and innovative regtech monitoring tools, the corporate regulator is monitoring advertising of a wide range of products and services across a broad range of media, including social media.
ASIC is targeting advertisements that are misleading or deceptive or that help it to identify products or services which are unsuitable or inappropriate and may be seeking to exploit people in the current COVID-19 environment.