Blog, Finance, Finance Advertising Compliance, Mortgage Broker Campaigns, The Thin Green Line

Ethical and Legal Financial Advertising

A short time ago we published an article where we showed how dodgy marketers would often use generic advertising, illegal lead generation, and "catch-all" landing pages originating from fake finance business to capture leads. The leads are then used to subsidise poor-performing Facebook programs, as free giveaways in Facebook Groups, or they'll be bundled up into "buy now" packages. The charlatans, or those that simply don't know any better, seemingly ignore the plethora of heavily-enforced legislation that underpins all financial marketing - some of which is introduced in this article.

In the honest and ethical world of finance marketing, we're still seeing a large percentage of brokers manufacture advertising that is non-compliant, or use advertising in a manner that wouldn't withstand ASIC scrutiny. When advertising is outsourced, we find many marketers will invest resources to ensure they comply with Facebook and other platform-specific requirements, but they'll often ignore the array of legislation that dictates how financial advertising should be presented. Certainly, there's a heavily-promoted and extremely poor-performing $2000 'program' floating around the market that promotes non-compliant advertising and emails - potentially leaving brokers liable for prosecution and/or heavy fines. Sadly, though, this is just one example of marketing representation holding brokers' hands into a realm of utter non-compliance.

I personally feel that as an industry that places its reputation and existence on compliance, we shouldn't diminish the role of our digital presence or assign a lesser importance to compliance in the marketing space. Digital is every bit as important as your internal business compliance... but it's often a weak point in your business armour that potentially leaves you liable to prosecution. If ASIC ever decides to pursue marketing non-compliance with any vigor we'll likely see a large number of brokers before the chopping block.

This article is far from any complete resource.... and no guide ever is. A good understanding of all the applicable legislation is the only means of ensuring compliance. However, we'll focus on those areas where we see the majority of infractions.

Relevant Legislation

The applicable legislation that applies to financial advertising is significant. The following is a non-exhaustive list.

Of course, the Spam Regulations (2004) and Privacy Act (1988) also apply.

It's not feasible nor possibly to list all the relevant requirements imposed by legislation. However, both ASIC and the MFAA have published their own guidelines.

The latter ASIC document is rather comprehensive although the MFAA provides a suitable summary. There are numerous other Government resources, such as those provided by the ACCC and busines.gov.au

General Financial Advertising Guidelines

Generally speaking, the following and most basic principles should be adhered to. They're just a few of the numerous recommendations made by ASIC's Regulatory Guide, 234.

Advertising should not be false, misleading, deceptive, dishonest, or likely to mislead or deceive (a principle that applies to any business). ASIC states that when a disclaimer of any kind is required, the strength of the headline determines the size of the 'small text' - although the small text should not diminish or contradict the headline. The stronger the headline claim, the more important it is for risk information to be included in the advertisement (banner, Facebook etc.) itself and not included in a reference to another page. This is important on Facebook when using lead ads; if you don't have a landing page that expands upon the promise, your scope for copy text is extremely limited (and we see brokers violate legislation every day). Platforms that provide limited space for balanced information (such as Twitter) should be used with caution.

The contents of advertisements should not be inconsistent with warnings, disclaimers, qualifications and any headline claims.

Do not use the terms 'independent', 'impartial', or 'unbiased' unless the advertiser receives no commissions or other benefits from lenders. For example, do not say that you offer "independent advice" or "unbiased analysis" - even if the statement is generally true. Don't use the words the "best deal", "lowest rates", or "cheapest product" - instead, use terminology such as a "well structured loan suited to your specific needs from our broad panel of lenders".

Do not use the terms 'free', '100% free service', or '100% free mortgage brokers' if a commission is paid. A broker is paid by the banks, and ultimately the consumer. Using 'free' is in contravention of legislation and attracts significant penalties.

If a home loan provider promotes an attractive interest rate discount that is only available to a consumer who takes out a large loan, any restrictions on availability of the interest rate discount should be prominently displayed so consumers seeking smaller loans will understand that they cannot access the discount. The use of qualifying phrases such as 'up to' or 'from' should generally be approached with caution because the overall impression created by an advertisement may still be that the maximum benefit is more widely or readily available than is in fact the case. An example comes to us by way of a HSBC advertisement that claimed there was "0.95% off home loans"... but that discount only applied to home loans that were greater than $1.5 million. If the home loans were for under that amount then lower discounts would be offered, even though that was mentioned in the disclaimers. HSBC were penalised for this breach. So, any advert that states "Does Your Interest Rate Start with a 2" or something similar (becoming more common with lower rates), and that rate is conditional in any way, you are often in breach of legislation.

Where a product may be suitable for an identified class of consumers, the advertisement should make clear that a consumer within that specific class may qualify or find the product suitable (however, on Facebook, this approach is itself discriminatory and not permitted). Terms such as 'conditions apply' or 'find out if you qualify' are rarely sufficient to warn consumers that the advertised product may not be suitable for them. This is particularly important for newly introduced schemes for Government sponsored First Home Buyer products that have a relatively high barrier to entry. Stating requirements in this case is usually necessary. Only this week an ASIC investigator showed us a bunch of non-compliant "First Home Buyer" adverts that were posted to Facebook Marketplace (often considered a channel for organic enquires) - yet every single piece of promotional material posted to Facebook was non-compliant.

Under the National Credit Code, an advertisement for a credit product does not need to include an interest rate, but must do so if the advertisement states the amount of any repayment. The advertisement must also include references to any fees and charges (s150, National Credit Code). Where an advertisement refers to interest rates and/or fees and charges, it is important that the advertisement gives consumers a realistic impression of the overall costs.

In many cases, credit contracts are structured with an initial promotional period, where a discount interest rate applies and/or other fees are waived, before the interest rate and fees revert to a higher level on an ongoing basis. If an advertisement includes details of this interest rate or fees, it should state, with equal prominence, the period for which the discount applies (RG 234.62).

An advertisement must contain a comparison rate if it contains an interest rate (s160, National Credit Code). Note: An advertisement is not required to include an interest rate, but must do so if it states the amount of any repayment (s150, National Credit Code) (RG 234.65).

Care should be taken when using certain terms and phrases in an advertisement, particularly where the way those terms and phrases are used is not consistent with the ordinary meaning commonly recognised by consumers (e.g. 'free', 'secure' and 'guaranteed') (RG 234.91).

Advertising should not falsely represent that a product or product issuer has an endorsement or approval that it does not actually have. This is particularly relevant in a world where some brokers have turned to the 'Jack and Jill' ads (you've probably seen the long-form copy that we're referring to - they start with the typical "Meet Jack and Jill", or "Our finances were everywhere"). The ads direct an individual to a lead magnet (a real financial product) and provide a poorly written "7 Steps to ..." style of report in exchange for a subscription. This form of advertising - often used to comply with Facebook's own financial advertising policies - is objectively breaking the law. Testimonials from individuals should be attributed to those making the claim and must be authentic; this is particularly essential if used in advert copy. This "Jack and Jill" style of copy is often used to navigate the requirements imposed upon rendering actual savings ("I ended up saving $3429 a year" style of copy), and is often perceived as a suitable means of navigating the requirement to include comparison rates. The problem with the "Jack and Jill" style of ad is that it's a fundamentally flawed approach that leaves the author and business liable to prosecution. When a marketing company uses the same advert over and over for different businesses (something we never do) they will personally inherit ASIC's wrath.

The comprehensive RG234 document should be read it full in company with relevant legislation.

It's interesting to see ASIC note in section RG-234.147 of their RG234 document that "... promoters should be particularly careful about using a facility for a consumer to access additional information where an advertisement is on a third-party site, rather than an advertisement on the promoter's own website". This include leadpages, ClickFunnels, and other similar sites. ASIC says that consumers "will have less motivation to actually access that additional information" but they make no mention of the more significant issues associated with privacy and business risk. Using third-party sites - even as a DIY option - is something that should almost always be avoided because it potentially violates Australian Privacy Law and the implied requirements of a Credit Licence. Of course, no self-respecting marketer will ever recommend these sites... but despite this, we're still the only financial marketers we're aware of that provides a fully-contained and integrated on-site experience. From a marketing point-of-view, sending a consumer to a website other than your own is simply absurd.

All email marketing campaigns and social media must also fully comply with legislation... and it's one area where common sense and compliance often fails to apply. For this reason alone template-based emails will never work because they're not structured to take your business practices into account. Some templates will also populate testimonials and other fake information.

The nature of the image associated with an advert is beyond the scope of this article, but it's worth noting that using a 'celebrity image' is against the Code. If you've ever used an image of Arnold Schwarzenegger or a screenshot from Breaking Bad (two that we see more than any other) you're not only liable for damages imposed by ASIC, but also those by independent artists and film studios. If you do have a legitimate celebrity endorsement, that celebrity should have a true working understanding of the product. Again, and while it might seem obvious, any image you use in an advert for any purpose must be licenced - never simply use Google Images . A recent example of a fine imposed upon a broker by violating copyright comes to us by way of a Real Estate agent that sued a broker for using one of their home images in an advert without permission. We spoke to the broker involved in the dispute and his defence was that his marketer had told him to Google and image that looks like it's a Brisbane property (see more on images in our introductory article on "Creating Better Facebook Ads"). This broker's (non-compliant) copy-and-paste template-based First Home Buyer advert was posted to Facebook Marketplace but ended up costing him thousands in damages despite no return whatsoever from the exercise.

It's prudent for brokers, accountants, and financial advisers to read all applicable legislation. While the RG234 is comprehensive it's still far from thorough. Lesser known examples of the Credit Regulations (2010) even dictate the colours to be used on product Key Fact Sheets. While most product fact sheets are manufactured and disseminated by banks in compliance with the "style guide" incorporated into the Act, larger white-label aggregator products and those produced internally (or outsourced to marketing groups) are often produced without regard to legislation.

Pictured: National Consumer Credit Protection Regulations, 2010, Section 28LB. Just one of many lesser known requirements imposed by the Act.

Advertising record keeping and compliance will progressively be policed in a manner not unlike that which is most often applied to other areas of a finance business. This means that every advert to make its way online - or any edit to any advert - is required to be kept on record (something we've always done). As per RG 234.149, and further detailed in the Act, all advertisements (including associated landing pages, disclaimers, etc) should be archived should any future dispute arise regarding the advertisement. We do this for our clients and always have done (it's in the Act, after all). Is this something you're doing yourself?

Grant Holley and Chris Wallace of Holley Nethercote Lawyers have published a mindmap that suitably describes ASIC's RG234 document. Download the PDF directly here .

Pictured: Holley Nethercote Lawyers ASIC RG234 Advertising Guidelines Mindmap. Source: HNLaw.com.au .

RG 234.151 acknowledges that the Internet is changing at a pace that'll require ongoing amendments. We're seeing more and more cases of 'misleading' or non-compliant advertising making their way into the courts, and this is creating precedents that dictates the ongoing and evolving nature of the RG document.

If you're outsourcing your marketing, ensure that you're not dealing with somebody that has ever hinted at "free leads", or anybody that provides packages, or a lead return guarantee. Seeing the "leftover leads" message in a Facebook group of similar is an indication that you're dealing with a charlatan... so steer clear. Legislation doesn't normally permit ignorance as an excuse so having an intimate understanding of your lead generation methods is vital.

While ASIC's mention of third-party landing sites is limited to one of trust, the industry has evolved to the point where fully integrated landing pages are essential (again, we're the only finance marketing experts to provide such a feature). While integration offers numerous benefits - not the least of which is a massive boost in conversions - it's the only manner in which to provide a true full-stack marketing funnel experience, and it provides your business with direct oversight, ownership, and control. Those ridiculous and superfluous third-party landing websites are the scourge of the respectable marketing industry; if this is what your marketers have provided you it's time to seriously rethink your marketing representation.

We understand that our approach to business growth and lead generation isn't for everyone... so if you're in that camp but would like some good recommendations for a company that provides a good service we'd be happy to point you in the right direction. There are a large number of really good media and marketing agencies in the industry that will guide you through fully compliant and high-yield ethical campaigns that are entirely consistent with financial guidelines (just none that we've seen sharing the finance space). The irony of financial marketing is that you would normally see better results, and be better protected legally, if you enlisted the services of a company that doesn't claim any specialty in the financial market.

Marketing and advertising is meant to be an exciting endeavour that embraces your business brand and sets your business apart from the vanilla competition. As we've said over and over, finance has to stop accepting mediocrity and non-compliance as a standard.

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