ASIC has a strong, ongoing focus on the marketing of financial products across the industries we regulate, including superannuation. Insufficient disclosure or marketing that does not fairly represent a product or its key features and risks, can be misleading and create unrealistic expectations, which may lead to poor outcomes for consumers. So we are continuing to look closely at product disclosure, advertising and promotions that misrepresent performance, risks or the nature of products.
For example, our ongoing surveillance into managed investment fund marketing by responsible entities resulted in ASIC securing amendments to the marketing material, practices and compliance plans of 17 responsible entities. While ASIC made no findings of any of breaches of the law, and the marketing of concern varied from fund to fund, the funds and their responsible entities were identified in media releases. Stop orders were issued in relation to misleading marketing by two other responsible entities where ASIC took court action for misleading or deceptive conduct in relation to fund marketing.
In superannuation, the importance of accurate and balanced advertising has been brought into sharp focus with reforms that have expanded consumers’ ability to choose their fund. This has increased the importance of fund marketing for trustees wanting to attract new members.
Consumers often rely on advertisements or other promotional material when considering whether a product is right for them, so it is crucial that any advertising for superannuation funds is accurate, balanced and fair. Where applicable, the advertising should point to all the relevant disclosure that would enable consumers to make a well-informed decision about their superannuation.
Since 2017, we have been conducting an ongoing proactive surveillance of fund advertising by superannuation trustees, with the number of ads we have reviewed increasing significantly over time. For instance in 2022 we reviewed 7,408 ads spanning print, television, radio, digital and social media, including across platforms such as Facebook, Instagram, and TikTok. Through this work, we have identified some potentially problematic advertising practices by superannuation trustees in areas such as:
- fund performance – how trustees represent their funds’ financial achievements
- product disclaimers – whether trustees are making the required disclaimers appropriately
- greenwashing – whether representations about the extent to which a fund or investment strategy is environmentally friendly, sustainable or ethical are accurate and appropriately supported by evidence, and
- consistency of language – whether the use of multiple languages in advertisements results in important content not being made available.
We have outlined our observations and made suggestions for trustees to improve the quality of their marketing and of their marketing oversight below. Trustees are encouraged to review their current practices to ensure that checks are made to any upcoming advertisements for potentially misleading content to avoid any risk of breaching the law.
Funds commonly focus on ‘performance’ in their advertising and promotional material. Given the significant weight consumers can place on past performance, we are particularly concerned about any potentially misleading representations about past performance.
For example, during our surveillance we identified a trustee using the words “top 25% performance” in their fund advertising. However, this claim was based on performance during a specific six-month period, outside of which, the product was one of the poorest performers in the industry. Trustees need to ensure they don’t ‘cherry pick’ data that could mislead consumers about the performance of the product. The advertisements need to contain sufficient context for consumers or include prominent and proximate disclaimers. In this instance, following engagement with ASIC, the trustee removed the advertising.
ASIC’s Regulatory Guide 53 The use of past performance in promotional material (RG 53) recommends using performance information for standardised periods of at least 12 months and avoiding inappropriately short or irrelevant time periods. This is particularly important for superannuation as a significantly long-term investment as it allows a consumer to obtain a better picture of fund performance over time.
Product disclaimers and mandatory content requirements
Another issue commonly identified in our review of advertising by trustees, is trustees failing to comply with certain disclosure obligations. We recognise that there are format limitations to advertising that can make it difficult to convey detailed and lengthy information. However, any advertising content should include the necessary warnings, disclaimers or qualifications and trustees should ensure that these are prominent and proximate. Trustees should also bear in mind that a disclaimer will not erase or neutralise the effects of a misleading advertisement and they should not rely upon disclaimers to dispel a deceptive representation.
Section 1018A of the Corporations Act 2001 requires, amongst other things, advertising to include a reference to the product disclosure statement (PDS) and describe the target market for the product or information about where target market determinations (TMDs) can be found. These documents provide important information on the features of the product and insights into who it is intended for, and whether the product is suitable for a consumer’s needs, objectives and financial situation.
We are concerned that advertising is being released by superannuation trustees that does not include these s1018A requirements. This is a failure to comply with legal obligations and is an offence under the Corporations Act 2001.
More broadly, the failure to meet these requirements also raises broader questions about the quality of a trustee’s advertising oversight practices. We have raised these concerns with a number of trustees that have subsequently reviewed their processes and made changes to their advertising to address these issues.
ASIC considers ‘greenwashing’ as the practice of misrepresenting the extent to which a financial product or investment strategy is environmentally friendly, sustainable or ethical. As consumers increasingly look to more sustainable and ethical investing, including via their superannuation, we are looking to ensure funds have the evidence to back their claims and are not promising exclusions that they cannot guarantee.
Some instances of potential greenwashing we have observed so far are around inaccurate or imprecise statements by trustees regarding their environmental, social and corporate governance (ESG) investment exclusions in promotional materials. For instance, marketing statements that give the impression that a fund broadly does not invest in companies involved in certain environmentally harmful practices but in practice the exclusions applied are limited.
Greenwashing is an enforcement priority for ASIC and ASIC recently issued an infringement notice to a superannuation trustee and three infringement notices to an investment manager.
Another growing trend is broad comparative advertising. For example, some trustees are making sweeping claims that they are the only fund to do, or not do, something in the ESG space compared to a competitor (“the only fund to seriously tackle climate change”). Trustees should be mindful that such claims have the potential to be misleading or deceptive.
Trustees and their advisers should ensure that any communication to members and the broader market in relation to sustainability credentials are accurate and have a reasonable basis. ASIC’s Information Sheet 271 (INFO 271) provides detailed information for trustees on how to avoid greenwashing when offering or promoting sustainability-related products or otherwise making sustainability-related claims.
We are actively monitoring the market for potential greenwashing and will take enforcement action, including court action where appropriate, for serious breaches.
Consistency of language
We also observed a less common but nonetheless important issue in our advertising review around the use of non-English based advertising. Some superannuation funds are leveraging the cultural and linguistic diversity in Australia by running campaigns that make use of languages other than English to attract members. However, all advertising, including those tailored to culturally and linguistically diverse consumers, needs to have the same quality of information and the language used should be consistent. We are concerned that this is not always the case.
ASIC’s Regulatory Guide 234 Advertising financial products and services (RG 234) recommends that if the main body of an advertisement is in a language other than English, any warnings, disclaimers or qualifications should be in the same language to ensure these are effective.
Context in advertising: When assessing whether a trustee has created a misleading impression through advertising, we generally consider the dominant message or general thrust of the advertisement to determine the representation. Any content, including headline claims, should be consistent with the features of the product. Where relevant, it is important for trustees to consider the context in which the advertisement is placed and how consumers perceive it, including if they are looking at digital advertising on small screens.
Oversight of marketing: Trustees should meaningfully oversee the way in which their funds are marketed to members. They need to monitor, supervise and approve the fund’s marketing to consumers to ensure it is accurate and reliable. Where trustees have outsourced advertising to a promoter, we expect a robust level of oversight of the fund promoter to ensure they are complying with the relevant legal obligations. Trustees retain ultimate responsibility for the operation of the fund.
Social media marketing: ASIC recognises that the way consumers access critical information and make decisions about financial products is changing, and that more trustees are turning to social media platforms to market their products to younger consumers. Trustees must ensure that any social media advertising does not stray into personal financial advice.
We suggest that trustees take care with new trends in social media marketing, such as the use of financial influencers (commonly known as ‘finfluencers’). ASIC’s recent young people and money survey found that 64% of young people between 15-21 years reported changing at least one of their financial behaviours as a result of following an influencer. We are closely monitoring the use of influencers by financial firms. Trustees considering the use of influencers as part of their promotional initiatives need to be aware of their obligations because they may be liable for any misconduct by the influencers they engage.
Whether engaging influencers or using platforms like TikTok and Instagram, trustees are reminded to:
- do their due diligence
- maintain appropriate disclosures
- put appropriate risk management systems and monitoring processes in place
- have sufficient compliance resourcing to monitor the influencers they use, and
- consider their design and distribution obligations.
We also encourage trustees to consult ASIC’s Information Sheet 269 Discussing financial products and services online (INFO 269) which contains helpful information on the use of social media influencers.
We suggest trustees examine their current advertising practices based on our observations from this review, consider the potential impact on consumers and take steps to comply with our guidance in relation to marketing.
We expect all trustees to be familiar with the principles and regulatory guidance, including that:
- marketing must give balanced messages about returns, features, benefits and significant risks
- risk disclosure needs to be clear and prominent
- the safety, reliability or security of an investment should not be overstated
- comparisons with other products or benchmarks must be appropriate and reasonable
- any reliance on past performance must explain that it is not indicative of future performance, and
- care must be taken with the use of images, graphs and tables to ensure they are not confusing.
Our primary concern is to protect consumers where marketing practices run counter to their interests. Where we identify misleading conduct, ASIC will consider a range of regulatory actions to disrupt poor conduct and prevent consumer harm. Trustees should also bear in mind that poor marketing practices and oversight may backfire; if a trustee is identified as engaging in misleading advertising, then this may lead to reputational damage rather than attract new members.
For good practice and compliance information related to marketing, refer:
- Regulatory Guide 234 Advertising financial products and services (including credit): Good practice guidance (RG 234)
- Regulatory Guide 53 The use of past performance in promotional material (RG 53).
- Information Sheet 271 How to avoid greenwashing when offering or promoting sustainability-related products (INFO 271)
- Information Sheet 269 Discussing financial products and services online (INFO 269)