Advertising Standards Authority releases draft Financial Advertising Code

The Advertising Standards Authority (ASA) is currently consulting on a new draft Financial Advertising Code. This review is timely as it coincides with an overhaul of other consumer financial legislation, including the recent amendments to the Financial Markets Conduct Act 2013 and the upcoming amendments to the Credit Contracts and Consumer Finance Act 2003 coming into force.
 
The new draft Code substantially expands the definition of an advertisement for a financial product or service. The new definition includes all:

• insurance products, services and advice;

• banking, debt or credit products and services and advice;

• investments products, services and advice;

• payment products, services and advice;

• financial or risk-trading or management products, services and advice;

• investments or licence to occupy relating to a retirement village; and

• financial training or courses.

This definition also specifically lists certain products that fit the definition of a financial product or service which were unlikely to have met the previous definition, for example, Afterpay (or any similar buy-now-pay-later service) and cryptocurrency.
 
The Code still requires advertisers to comply with the two overarching principles of social responsibility and truthful presentation. However the updated guidelines make it clear that advertisers will need to consider:

• Financial advertising content posted by influencers, content creators, and other individuals that aren't licensed financial advisers. Influencers will also need to identify advertisements as such, in line with the ASA's recent guidance on influencer content.

• User-generated comments and reviews of financial products on any financial advertising content. Comments and reviews will need to be monitored for compliance with the Code.

• Hyperbole. The Code states that use of hyperbole for financial advertising is prohibited. This is different from general advertising, for which, under the Advertising Standards Code, may allow obvious hyperbole.

Submitters on the Financial Advertising Code have been specifically asked to consider the following four issues, as well as providing any other comments that they may have:

1. Whether the ASA's definition of "Financial Product or Service" proposed is capable of being easily understood by consumers, and helps consumers to easily recognise if an advertisement is a Financial Product or Service as defined in the Code. 

2. Whether the ASA's definition of "Financial Product or Service" is broad enough or if there are any other financial products, services or advice that should be included in the definition.

3. Whether submitters agree with the wording of the rest of the draft Code.

4. Whether submitters consider that there are matters not covered in the Code that should be included.

Submissions on the ASA's draft Financial Advertising Code are due by 12 October 2021. A finalised Code is expected to be released in November 2021, and come into effect for new advertising from 1 March 2022 and all advertising on 1 June 2022. 
 
The draft Code is available in full here.
 
Please get in touch with one of our experts below if you would like to discuss how this update may impact you and your organisation.

This article is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter of this newsletter, please contact the partner/solicitor in the firm who normally advises you, or alternatively contact one of the partners listed below.