3 January, 2013
Legal News & Analysis – Asia Pacific – Australia – Regulatory & Compliance
In February 2012, ASIC released Regulatory Guide 234 Advertising
financial products and advice services: good practice guidance (RG 234) following a period of consultation with industry.
On 15 November 2012, ASIC released an update to RG 234 – Advertising financial products and services (including credit): Good practice guide (Updated RG 234). This update was issued by ASIC to extend the guidance in RG 234 relating to credit products and services consistent with the National Consumer Credit Protection Act 2009 (Cth).
However, ASIC has also inserted some new provisions which will apply
to both financial and credit products and services. These new provisions appear to stem from an effort by ASIC to address matters of technology including extending the guidance to text messages and Facebook comments. ASIC has also updated the language in RG 234 to allow administrative action if a licensee is “likely to” contravene its obligations.
Updated RG 234
RG 234 applies to any communication whose purpose is intended to inform consumers about or to promote financial products or financial advice services. This includes websites, advertising in print, radio and television, outdoor advertising, social media, direct mail and presentations. RG 234 includes practical examples and scenarios where disclosure has fallen foul of ASIC’s preferred approach.
Updated RG 234 provides additional examples of how the guidance should be interpreted in the context of credit products and services. Specific guidance is given for advertising credit products and services as well as guidance on promotional and comparison rates. While these additional credit specific examples are consistent with the general guidance that was already in place, they do serve as useful illustrations for practical application.
Additional Changes
Advertisers of financial products and services should, however, be aware of the additional changes to RG 234 which now apply. Some of the more significant amendments are set out below.
“Likely to” contravene your obligations
One change that ASIC has introduced in Updated RG 234 is that it may now take administrative action (such as suspending or cancelling an AFSL) in situations where it believes an AFS licensee or one of its representatives “is likely to contravene its obligations”. Under the original RG 234, ASIC’s power to take administrative action was limited to circumstances where a licensee “is not complying with its obligations”. This change is consistent with ASIC’s approach in other regulatory guidance as well as the Future of Financial Advice legislation. We encourage anyone who is subject to the provisions in
Updated RG 234 to be aware of ASIC’s current approach to enforcing this regulatory guidance.
Guidance applies to SMS, MMS and text messages
ASIC has clarified that its guidance will also apply to mobile phone messages (e.g. SMS, MMS and text messages). From a practical perspective, we consider that it will be a real challenge for a text message to contain a balanced message as is required by the guidance, setting out relevant fees and costs and appropriate warnings and disclaimers. This may in practice signal an end to the use of this format for such advertising.
Online banners and click through advertising
ASIC has provided more detailed guidance relating to online banners and click through advertising, in particular by clarifying that a click-through feature cannot be used to correct a misleading statement or impression in the advertisement. ASIC has encouraged promoters to be cautious when advertising on third party websites to ensure a balanced message is presented, particularly where there is a click through feature to explain the risks, terms and conditions or other features of the product on the promoter’s website. ASIC’s rationale for this is that consumers are less likely to click through a banner ad on a third party site, as doing so will interrupt their current online activity.
Comments and Testimonials
ASIC has included guidance relating to comments or testimonials that are posted by a third party on a Facebook page or another website owned, operated, controlled or maintained by the promoter of a financial product or a financial advice service. If the promoter “becomes aware” of the message and decides not to remove it, they will be deemed responsible for the message at least from the time they became aware of the message. It is not clear from the guidance how ASIC will determine (or monitor) when a promoter “becomes aware” of something being posted on their website or Facebook page. We encourage promoters to consider their approach to reviewing the content on websites they operate (including comments added by third parties). The practical application of this guidance will be interesting. While clearly a promoter will be obliged to remove a comment or
testimonial that contains an incorrect or misleading statement, how should an unfavourable testimonial be treated?
What Next?
All promoters of financial products and services and credit products and services (and publishers of advertising for such products and services) should review Updated RG 234 and consider how this may impact on any advertising materials they prepare.
Over 50 advertisements have been withdrawn or remedied in association with action by ASIC since February 2012. Industry participants should be aware that ASIC continues to be proactive when it comes to such advertising and marketing materials
