If it looks too good to be true, it’s probably so, and FMA tells you to do the right thing by your customers and clients releasing a new guide for advertising financial instruments. I want to make sure.
Thursday, October 14, 2021 10:54 AM
Financial Markets Authority (FMA) Issue new guidance After consulting with the industry last year, we have focused on how the Fair Trade requirements of the Financial Markets Behavior Act (FMC Act) apply to advertising financial products.
FMA expects companies to ensure that current marketing practices and campaigns are in line with final guidance over the next two months, and marketing to leverage vulnerable customers in the current Covid-19 situation. If there is an example, FMA is an action.
This guidance sets out three key principles that an organization should consider when promoting a financial product or service.
1.1. What was your overall impression of the ad when you first saw it?
2. Make sure your ad contains all relevant information, as omissions can be misleading, deceptive, or confusing.
3. Advertising claims must be substantiated.
“Advertising can have a significant impact on people’s investment decisions, so it’s important that companies marketing materials don’t mislead or confuse consumers,” said Liam Mason, FMA’s legal counsel. say.
The FMA encourages market participants to follow the principles set out in the guidance and consider how their actions will actively assist investors in making appropriate and considered investment decisions. increase.
The guidance stipulates that your ad should look like this:
-Truthful and accurate.
-Be careful when comparing different products.
-Balance risk and reward.
-Pay attention to phrasing and jargon.
-Make sure your forecasts are based on reasonable and supportable assumptions.
-Don’t overemphasize performance.
-Prominently display warnings and disclaimers.
-Clearly disclose fees and costs.
-Do not claim to be approved, approved, or regulated.
-Can be identified from other content (such as sponsored content).When
-Clarify that offers to wholesale investors are not available to retail investors.
“We want companies to provide a balanced message so that the overall impressions and expectations formed by investors are realistic,” says Mason.
“For example, advertising must not give, imply, or otherwise give the impression that a financial instrument is safe or risk-free, and this has not been or cannot be proven. If so, the return is guaranteed. “
Mason says it is of utmost importance to substantiate the claim, which means that when it is done, the company must have a reasonable basis for its representative.
Anecdotal evidence, unsubstantiated opinions and assumptions do not form a rational basis.
“We are particularly interested in the advertising representation of the nature, suitability and characteristics of financial instruments.”
It also means that some ads, such as social media tiles and web page banner ads, need to be restricted or restricted.
These limit the amount of disclosure information that can be displayed, and companies often hyperlink to landing pages that contain the disclosure information they need.
FMA ensures that companies don’t get the misleading impression of “click-through” ads, make the message on both the first ad and the landing page consistent, and make all the necessary disclosures appropriate for the landing page. I expect to see it in.
For example, you cannot omit the required disclosure on the landing page and ask investors to fill out a form to get more information.
In addition to traditional advertising media, this guidance applies to social media, seminars, newsletters, product brochures, promotional fact sheets, direct mail (such as written letters and emails), group presentations and seminars, and advertising. increase.
Fair dealing provisions apply to anyone who provides financial products to New Zealanders, regardless of location, and prohibits the following:
— Misleading or deceptive behavior, including misleading or potentially deceptive behavior.
-False, misleading, or unfounded expression.When
-Provision of financial products in the process of one-sided meetings.
In addition to enforcement authority under fair dealing clauses, the guidance provides that FMA uses regulatory tools such as stop orders and directives to swiftly take action against ads that may confuse or mislead consumers. It states that it can be taken.
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