'I'll just tweet this product recommendation': ASIC's thoughts on advertising financial products and advice services using social media (or, OMG!! DBEYR - ASIC's nu RG!!)

Posted by Anthony Oxley & Tony Dhar

The Australian Securities & Investments Commission (ASIC) recently released regulatory guidance in relation to advertising financial products and advice services.

ASIC's guidance was issued to assist promoters of such products and services comply with their legal obligations, including to not make false or misleading statements, engage in misleading or deceptive conduct and to not make representations about future matters without reasonable grounds. 

What kind of ads?

The guidance applies to any communication intended to advertise financial products or financial advice services. So, the form of media is not important to ASIC. Advertisements are treated the same whether they appear in:

• traditional media (newspapers, magazines, radio, TV)
• the internet (websites, banner ads, streamed videos)
• social media and internet discussion sites
• other media, including direct mail, telemarketing and seminars.

 

Will this compromise my innovative social media strategy? We worked so hard to reduce our advertisement to 140 characters!

ASIC's guidance does not require advertisements to be self contained (this did form part of ASIC's original proposal in this area).

Having said that, the guidance requires disclaimers or warnings to be comprehensible, and, where the chosen advertising medium has inherent content limitations (such as the 140 character limitation on Twitter), promoters must consider whether that medium is appropriate if it limits providing balanced information to consumers.

So – promoters may still devise engaging and interesting campaigns, subject to their overarching legal requirements, including against campaigns or catchy taglines (or tweets...) that might confuse.

In the social media context, this would for example require consideration of the overall impression given by:

• short/sharp banner ads;
• succinct tweets with over-reaching promises;
• words that have a particular meaning in the minds of consumers (such as free, secure, or guaranteed); and
• disclaimers on websites that flash up, and then immediately off.

Thinking about Twitter specifically, in light of ASIC's guidance relating to the requirement to provide balanced information, promoters should also be careful about disclaimers and warnings in tweets, including having regard to ASIC's view that 'consumers should not need to go to another website (or other page of the website) or document to correct a misleading impression'.

Example tweet	OK?
Fee free accounts at [YourBank]! [+ link to website, or t's & c's which say fee free accounts only available to new customers]	shouldn't need to go to another website to correct a misleading impression.
No annual fees on [YourBank] transaction accounts! [+ link to t's & c's which say there are monthly fees, the cumulative effect of which is an annual fee]	as above, shouldn't need to go to another website to correct a misleading impression.
Low introductory APR and free balance transfers! [YourBank credit card] [+ link to t's & c's which state that low APR and free balance transfer offers not available concurrently]	as above, shouldn't need to go to another website to correct a misleading impression.
[YourBank]. No fees - eligibility conditions apply. [link to t's & c's]	Maybe - depends on conditions, eg. does customer need a fee paying connected account, or a loan over a certain balance? If so, probably not ok as 'no fees' is not balanced.
Get a great deal on a home loan! [link to product website]

As the examples above show, in the context of Twitter, we think it would be difficult in practice to comply with ASIC's guidance within 140 characters. From a marketing perspective, it might be more likely that Twitter is used as a 'sign post' to refer people to a website for the product. So, tweets need to be more 'sales pitch neutral' so as to not create an impression that is then later qualified or disclaimed somewhere else.

 

Other examples of what you may need to be careful about!

Specific examples given in ASIC's guidance include:

• calculation of returns using foreign currencies (and not Australian dollars)
• overstating the security of a financial product
• insurers not making potential customers aware of conditions (such as the absence of at-fault claims, or age restrictions)
• comparisons that are not like for like, or that ignore other features
• implying that past performance will continue
• celebrity endorsements where the endorser actually knows very little about the product they are endorsing
• images that might imply the company is at a more advanced stage of development that is in fact the case (eg showing a working mine where the business is still at an exploratory stage)
• conflicted remuneration structures for financial advisers.

Recently, two financial institutions have been required to withdraw or modify marketing material relating to credit card limit invitations placed in various forms of media – including on a website, on physical credit card statements and email. Further, one financial institution agreed with ASIC to cease using 'stress free' in its marketing of certain geared investment strategies. At the time, ASIC's commissioner encouraged the financial services industry:

to strive to do more than simply meet the minimum requirement of not being misleading or deceptive. Rather, [ASIC encourages] industry to actually take a role in ensuring that advertising helps investors and consumers to make decisions that are appropriate for them.

 

I'm only a publisher, so should I worry?

While defences from prosecution for publishers are available if the publisher received the advertisement for publication in the ordinary course of their publishing business and did not know, and had no reason to believe, that its publication would amount to an offence, there are still residual legal and reputational risks for publishers, including aggregator and comparison sites.

Such publishers should closely monitor 'advertorial' type content and/or the disclosure of commissions and referral fees.

 

And finally, ASIC has embraced social media itself...

Finally, just a note in passing that the use of social media to engage directly with an audience hasn't escaped ASIC itself – see ASIC's moneysmart website, launched in March 2011, together with its Twitter feed (500+ tweets), Facebook page (800+ 'likes'), mobile apps for investment calculations and YouTube videos on home loans.  This use of social media is consistent with ASIC's aims to provide independent information to educate potential investors, and more broadly is part of the government's National Financial Literacy Strategy.