ASIC RG 234: advertising financial products and advice services

What RG 234 covers

ASIC Regulatory Guide 234 details ASIC’s expectations for advertising financial products and advice services directed at retail clients. The guide provides clarity on how advertising should be presented to ensure consumers are adequately informed.

The scope of the guide is broad, applying to a range of entities involved in the financial services sector. This includes Australian Financial Services (AFS) licensees, product issuers, distributors, advisers, and any other parties involved in promoting financial products to retail clients.

RG 234 operates in conjunction with existing legislation. It supplements the strict-liability prohibitions concerning misleading or deceptive conduct, as outlined in sections 1041H of the Corporations Act 2001, section 12DA of the ASIC Act 2001, and section 18 of the Australian Consumer Law.

The core standards

Advertising for financial products and advice services must adhere to specific standards to ensure consumers are appropriately informed. These standards require advertising to be clear, accurate, and balanced. This means information presented must be easily understood and not deceptive.

Crucially, material risks, fees, costs, and conditions associated with a financial product or service must be communicated prominently. These details cannot be obscured within small print or difficult-to-access locations. Consumers should be able to readily recognise the full scope of obligations and potential downsides. penalty estimator may assist in understanding potential consequences of non-compliance.

When advertising includes past performance data, it must be accompanied by appropriate context and warnings. Such advertising cannot suggest that past results will necessarily reflect future outcomes. Comparisons between financial products must also be fair and not misleading, with the basis of comparison and any relevant differences in product features clearly stated.

Common compliance traps

Advertising financial products and advice services under ASIC RG 234 presents several common compliance challenges. A frequent issue arises when advertising materials present headline returns or rates that do not accurately reflect the returns most customers will experience. This discrepancy can occur when advertised figures fail to account for fees, taxes, or specific conditions that apply to the product.

Misleading language is another area of concern. The use of terms such as 'capital protected', 'guaranteed', or 'risk-free' is problematic if the underlying product or service does not genuinely offer those protections. Advertising must accurately reflect the nature and extent of any safeguards provided.

Furthermore, the rise of influencer and finfluencer marketing has introduced new risks. Advertising content created by influencers requires clear and conspicuous disclosure of any relationship with the financial product or the licensee. Cross-product comparisons are also subject to scrutiny; these must not selectively highlight a single appealing feature while overlooking significant differences in risk or fees.

• Clearly disclose relationships with financial products or licensees.
• Ensure advertised returns accurately reflect customer experience.
• Avoid misleading language regarding risk or guarantees.

Enforcement

ASIC enforces the requirements for advertising financial products and advice services through various means. The regulator has previously commenced civil-penalty actions against both issuers and distributors of financial products. These actions have addressed instances of misleading advertising, including representations concerning performance, capital protection, and comparisons between products.

Failure to comply with advertising obligations can result in significant financial penalties. For bodies corporate, the maximum civil penalty is the greater of a penalty-unit amount, three times the benefit obtained from the non-compliance, or 10% of the company’s annual turnover during the period the breach occurred.

ASIC also utilises stop orders and product-intervention orders to address and prevent misleading promotional conduct.