1.        Introduction

The Advertising Standards Authority of Singapore (“ASAS”) has issued an update on 3 August 2015 implementing enhanced guidelines to regulate advertisements on investments, including investments in overseas properties and investment services (“enhanced guidelines”). The enhanced guidelines are contained within the new Appendix J of the Singapore Code of Advertising Practice (“SCAP”) and aim to minimise the scope for advertisers of investments and investment services to make claims that are speculative, misleading or which cannot be substantiated.

ASAS is an advisory council under the Consumers Association of Singapore, which seeks to promote a high standard of ethics in advertising through industry self-regulation. The guiding principles of ASAS are contained in the SCAP, which, in turn, was formulated against the background of national law and international law and practice, including the International Code of Advertising Practice.

While the SCAP does not have the force of law, it has been endorsed by organisations representing advertisers, advertising agencies and the media.

The update in Appendix J of the SCAP is driven by ASAS’ observation of an increase in the advertising of investments, promising high or guaranteed returns or results, but often lacking in sufficient warning against any financial, legal or regulatory risks. Consumers responding to such advertisements may thus not be aware of the various risks following from such investments – i.e. limited legal redress, the possibility of losing their capital investment, etc.

Addressing the above concerns, the enhanced guidelines will cover the following areas:

  • Warnings, disclaimers and qualifications;
  • Use of testimonials/ endorsements;
  • Details of benefits;
  • Advertisements on investments in general;
  • Advertisements on real estate investments;
  • Investment seminars;
  • Nature of the contract forming the basis of the product or service; and
  • Tax.

2.       Warnings, Disclaimers and Qualifications

ASAS’s emphasis is that the overall impression created by the advertisement is what matters. Disclaimers alone may not necessarily be effective in reducing the misleading or deceptive nature of an advertisement. ASAS noted that some headline claims are so strong that even a separate qualification might not correct the misleading impression.

Advertisers of investments or investment services will be required by the enhanced guidelines to clearly state whether or not they are regulated by other agencies in Singapore, such as the Monetary Authority of Singapore (”MAS”), or if they have any tie- ups with entities regulated by such agencies.

In addition, warnings, disclaimers and qualifications in print advertisements or television commercials have to be clearly laid out and legible to the unaided eye of the viewer. Any form of return or performance-related investment claim in any advertisement across all media platforms has to include a prescribed warning statement that all forms of investment carry risk, and may not be suitable  for  everyone.  For  overseas  investments,  additional  statements  highlighting  that  the investment must be included.

3.         Use of Testimonials/Endorsements

Given the potential reliance by consumers on testimonials/endorsements, the enhanced guidelines prescribe that testimonials and endorsements must be representative of the average consumer. The endorser should be a bona fide user of the investment or investment service. The endorsement or opinion expressed should continue to be held by the endorser at the time the advertisement is run. The advertiser should take steps to obtain the endorser’s confirmation in this regard, and keep relevant records.

ASAS has stated that it may contact endorsers to verify the authenticity of their testimonies. ASAS may direct the advertiser to remove unverified testimonials from its advertisements. Where there exists a connection between the endorser and the seller of the advertised investment or investment service that may materially affect the weight or credibility of the endorsement, such a connection must be fully disclosed.

4.        Details of Benefits

In relation to benefits, under the enhanced guidelines, advertisements that contain details of the benefits, which may accrue through investing in a given investment or subscribing to an investment service, should be understood easily and must not take advantage of the consumer’s inexperience or gullibility.

5.        Advertisement on Investments – General

The enhanced guidelines will require that all claims made in the advertisement must be claims that can be substantiated. Factsheets and documentary evidence must be made ready and available for verification, upon request. Advertisements should not contain claims that give the impression that an investment is “safe”, “low-risk” or “risk-free”, or able to generate “quick”, “easy” or “high” profits with little or no risk. Advertisements should also not contain claims that any amount invested will be repaid or returns on an investment are guaranteed.

Where an advertisement contains any forecast or projection of a specific growth rate, or a specific rate of return, the enhanced guidelines will require the advertisement to make clear the basis and assumptions upon which the forecast or projection is made. When an advertisement quotes past experience in support of a forecast or projected growth rate, a prominent caveat that states past experience is not necessarily a guide to future performance should be included. The advertisement should also indicate the circumstances and the period of such past experience in such a way that the reliability of the forecast or the projected growth rate can be fairly assessed. This is to ensure that past experiences are not extrapolated to give misleading projections of future performance.

6.        Advertisement on Investments – Real Estate

On the subject of advertisements involving overseas property-related investments, the enhanced guidelines require that these advertisements should clearly state the following information:

  • Whether or not investors are acquiring an interest in the land, the building to be built on it and/ or the property within the building which is available for acquisition.
  • If the property is still being developed, the development or building permit or building approval numbers and identity of the relevant authorities or agency which issued the permit or approval.
  • If there is a description of the site location, the actual site location, infrastructure development and accessibility.
  • Whether there is any form of restriction to foreign ownership or subsequent sale of the land, the building and/or property, and if so, to state the nature of any such restriction.
  • Whether there are any potential tax liabilities, rates or other ancillary costs involved.

7.        Investment Seminars

With regard to investment seminars, advertisements should not exaggerate the potential results or benefits of participating in the seminar. Claims made should be realistic, practical, and representative of the average participant. Advertisements on investment strategies should not give the impression that the strategy is “fool-proof” or “fail-proof”, or will quickly, always or consistently generate positive results or benefits for the participant with little or no risks.

For free or special bargain investment services seminars, special care must be taken to avoid misleading consumers. All terms and conditions associated with the redemption of any free product or services offered at such seminars must be clearly stated in the advertisement. If the free product or services can only be redeemed with a subsequent purchase or subscription, the information has to be made known. If the free product or services varies from the normal product or services, the information must be stated.

Advertisements relating to seminars on property-related investments or investment strategies will be required by the enhanced guidelines to clearly state whether or not the speaker/trainer is regulated by the Council for Estate Agencies (“CEA”), or whether such speaker/trainer has any tie-ups with entities regulated by the CEA.

8.        The Nature of the Contract

The enhanced guidelines will require that the type of contract forming the basis of the product or services advertised (and especially any charges, expenses or penalties) be made clear.

9.        Tax

Where a claim is made in an advertisement as to the return offered by a given investment, and the achievement or maintenance of the return quoted is dependent in part upon the assumed effects of tax or duty, the enhanced guidelines will require that the advertisement should make it clear that no undertaking can be given that the fiscal system may not be revised with consequent effect upon the return offered.

10.     Enforcement

ASAS will require advertisers, who fail to comply with the enhanced guidelines, to revise their advertisements, failing which to withdraw them altogether. Advertisers who do not comply with the guidelines run the risk that advertising space or time will be withheld from them by media owners, as well as that trading privileges from advertising agencies will be withdrawn. In extreme cases, there is the additional sanction of adverse publicity through the publication of details of the outcome of ASAS’ investigation.

11.     Implementation Period

The enhanced guidelines will commence on 12 August 2015. Advertisers and media owners with contracts signed prior to the effective date will be given a three-month grace period – until 11 November 2015 – to fulfil the existing contractual requirements and adhere to the enhanced guidelines.

12.     SLB Commentary

These new measures ought to be welcomed by consumers in general. Existing binding requirements on advertising or promotion of investments generally apply only to entities, products and/or services that come under the legal jurisdiction of specific regulatory agencies (such as the MAS). Consumers are very much left on their own in dealing with entities, products or services that are not regulated. While the enhanced guidelines do not have the force of law, they do serve the very useful purpose of helping to plug some gaps in our laws.