The Australian Securities and Investments Commission (ASIC) wants to support the growth of more confident and informed investors with the announcement of a proposed regulatory guide for financial product and service advertising.
The announcement of the consultation paper comes on the back of ASIC's 'National Financial Literacy Strategy' released in March which found that consumers are being asked to make more financial decisions than ever before, while the environment in which they are making those decisions is becoming increasingly complex due to the increased variety of products now available.
The proposed guide will affect promoters and publishers advertising investment products, risk products, non-cash payment facilities and credit facilities.
"The objective of our guidance is to help promoters and publishers present advertisements that are accurate, balanced and help consumers make decisions that are appropriate for them," said ASIC chairman Greg Medcraft.
ASIC has called for promoters and publishers to accurately disclose the nature of a financial product or service, as well as the product's associated returns, benefits, risks, fees and costs.
ASIC believes comparisons should only be made between financial products that have similar features and should only be made if the information used is current, complete and accurate. Similarly, they have stated past performance information in advertisements should be accompanied by a warning that past performance is not indicative of future performance
In terms of the presentation of content, ASIC said "advertising should be clearly distinguished from normal program or editorial content".
When advertising on radio, "any warning, disclaimers or qualifications should be read at a speed that is comprehensible," while in response to the use of various media to communicate to clients, the guide states that Internet users "should not need to click through an online advertisement to additional information".
Industry Super Network manager of strategy Robbie Campo said that while ASIC's regulatory guide does not provide any new guidelines, it has provided more clarity and detail in certain areas.
"For instance, we agree in ensuring that disclaimers are prominent and that they're held on screen for as long as it would take an ordinary person to read them," Campo said.
"In designing any Internet advertising we would not make any representations or claims in the ad – it's normally when you click through that there is additional information."
According to the guide, making statements that are materially false or materially misleading carries a maximum penalty of ten years imprisonment, while fines and injunctions will apply to lesser breaches.
"While our guidance covers issues of good practice in advertising, it may also help promoters and publishers comply with their legal obligations not to make false or misleading statements or engage in misleading or deceptive conduct," Medcraft said.
Comments on the consultation paper and draft regulatory guide are due by 25 October 2011.
