ASIC continues to focus on misleading advertisements

A new survey has found that the majority of Australians find advertisements from banks confusing, misleading or difficult to interpret, with Ehrenberg-Bass Marketing Institute finding just a third of respondents thought bank advertisements are honest.

The survey found that 70.4% of participants found bank advertisements ‘confusing’, while 64.7% thought they were ‘misleading’, reported Property Observer’s sister publication, Smart Company.

Only one-third of respondents (33.1%) thought bank advertisements were ‘honest’ and just 26.4% said they were ‘clear’.

Misleading advertising in property and in lending has been high on ASIC’s radar for the past few years. In fact, in August 2012 Property Observer reported that they were actively monitoring the way lenders advertise mortgage products, and noted they’d be conducting surveillance on mortgage brokers from September that year.

In the two years from July 2010 to August 2012, ASIC had forced 117 advertisers of financial products, including some mortgage products, to withdraw or modify their advertising in response to concerns.

Since that time, a number of mortgage and financial product providers have been asked to alter their advertising.

For instance, in April 2014, Virgin Money was asked to alter information around their life insurance products that had been advertised in television, until May 2013, and online, imposing penalties totalling more than $30,000.

In January 2014, Media Super Limited was required to pay a $10,200 penalty due to concerns around advertising in a factsheet entitled 'Self-managed super? You be the judge' that included the costs and benefits of an SMSF compared to an industry superfund. It was an online advertisement.

And in December 2013, MyRate Pty Ltd (My Rate) website (myrate.com.au) made changes following ASIC concerns that the home loan interest rates advertised had the potential to likely mislead consumers.

Other companies fined and asked to alter their advertising included Mortgage Choice, Wealth Within and SMSF SuperHelp.

The non-bank lender's website was said to give the impression that the advertised rate for variable home loans applied to both existing and new loans. In fact, it only applied to new home loans, meaning those with existing variable rates were charged interest above the advertised rate.

Meanwhile, yesterday, ASIC released guidance for superannuation companies in order to assist them in disclosing the information about superannuation funds and their trustees on their websites to help make the industry more transparent.

This is part of the Stronger Super reforms, beginning on 1 July 2014, which will require super companies to publish details of their executives, including remuneration, fund product disclosure statements, governing rules, actuarial reports and summaries of significant events of the past two years – all on their websites. The information must, under the new laws, be kept up to date.

For real estate agents, advertising with clarity and within the rules is also crucial. Auction prices, in particular, have been on Consumer Affairs Victoria's radar.

YOU MIGHT ALSO WANT TO READ:

Five ASIC highlights: Property breaches, collapsed development groups, falsified mortgage documents

From seminar to success story... to getting fined in the Supreme Court of WA: How it happened