Credit advertising is under the ASIC spotlight at present. Here’s a way to mitigate your risk.
ASIC has a strong interest in ensuring consumers are not misled by advertising. ASIC usually focusses on the overall impression given by advertisements, and often will not accept exceptions lurking in the fine print.
A key compliance issue if the comparison rate requirements in the National Credit Code which apply if an interest rate or repayment is mentioned. A breach can occur simply by displaying some information less prominently than other information, or not displaying certain information.
All licensee’s license conditions contain a requirement to act efficiently, honestly, and fairly. This obligation must be reflected at all times including in advertising. The advertisement must not be deceptive or misleading, and must be accurate and correct.
ASIC’s Regulatory Guide 234 (RG234) provides valuable guidance when advertising. However, businesses can often get caught up in the hype of their new product or new promotion and over-look important issues.
Gadens provides a one-business day cost effective advertisement review service. Some money up front can save significant cost and problems later.
ASIC has publicly taken formal action against six organisations for misleading advertising in 2014. Each advertiser was fined between $10,000 - $30,000, was required to take certain action potentially costing substantially more than the fines, and received negative ASIC publicity. These recent breaches included the respective advertiser:
- overstating true portfolio returns;
- representing that questions of a particular nature would not be asked in the product application, but they were asked;
- making time based claims that a decision would be ‘instant’ or ‘within minutes’, when the decision took longer;
- making a claim that a service was free when there was a precondition to receiving the free service;
- guaranteeing that credit would be given, which is inconsistent with responsible lending laws; and
- issuing a fact sheet containing misleading information about the costs and benefits of a financial product.
The consequences of a breach can be significant. They include fines, compensation payments to customers, public announcements (reputational damage), and orders to cease the relevant promotion and perhaps place corrective advertisements. These consequences can be much more expensive than the cost of an upfront legal review.