Health warnings for financial products and services

Whilst ASIC’s licensing conditions already require financial service providers to be competent to provide their services to consumers, the latest ASIC proposals in respect of advertising guidelines for financial products (see here) make it clear that ASIC is also concerned that financial advertisements contain the appropriate qualifications and warnings to consumers.

The amendments contain an example “Overstating the safety of the product” based an ASIC’s concerns over Westpac advertising margin lending as “stress-free” (see here).

It also emphasises that advertising must be accurate and disclose all of a loan’s features.

ASIC RG 234 already deals with disclosing unexpected risks, using certain terms and phrases to understate risks and inappropriate use of certain terms and phrases.

Apart from its other powers ASIC may issue a public warning notice if it has:
(a) reasonable grounds to suspect that a promoter may have contravened a consumer protection provision of the ASIC Act;
(b) satisfied that consumers have suffered, or are likely to suffer, detriment as a result of the conduct; and
(c) it is satisfied that it is in the public interest to issue the notice.

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