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Mortgage Broker Advertising Compliance

Mortgage Broker Advertising Compliance

There's not a day that goes by where we don't screenshot a dozen-or-so mortgage broker adverts that are non-compliant in at least one respect. This article introduces just a few of the common mistakes were seeing from mortgage brokers (although the most common source of the bad advertising is poor digital representation).

The most common error we see is a mistake that shouldn't be made in a post-Commission world - failing to include a comparison rate with a fixed term interest rate. We've introduced Mortgage Broker Advertising Compliance in the past but the quality of representation, or the mistakes brokers are making, are still ubiquitous in nature, and the consequences of the non-compliance advertising can potentially shut down your business.

First, we've taken screenshots of over 200 adverts, so what we're showing is just the tip of the non-compliant iceberg.

Mortgage Broker Advertising Compliance

Pictured: Typical adverts that fail to abide by the most obvious and legally required obligation - a comparison rate warning. It is not acceptable to link to a comparison rate; it must be included the published rate.

The error, of course, is the failure to include a comparison rate.

Part 10 of the National Consumer Credit Protection Act, 2009 - Schedule 1 , the National Consumer Credit Protection Regulations - 2010 , and various other pieces of legislation (and further guided by industry documentation, such as ASIC's Regulatory Guide 234 ), makes the most basic requirements for a comparison rate in your advertising very clear.

"An advertised comparison rate must be identified as a comparison rate and the comparison rate must not be less prominent in an advertisement than any interest rate or the amount of any repayment stated in the advertisement" (Section 164).

The comparison rate may not be smaller, hidden by colour opacity or colour, referred to with simply 'Conditions Apply', or displayed in any other location other than with an interest rate.

The comparison rate requires a warning but the long-form explanation isn't required in your advert, necessarily, unless your advert makes claims requiring a long-form explanation. In all cases, any destination website, landing page, or any other marketing asset must include the full comparison disclaimer.

A comparison rate in an advertisement must be accompanied by a warning about the accuracy of the comparison rate and that the comparison rate is accurate only for the example given in the advertisement. (Section 163, National Credit Code; Regulation 99, National Credit Regulations).

In all of the pictured examples, none included the necessary warnings regarding the comparison rate. Further, in those cases where adverts were managed by the scourge of the digital world - lead generation guys - the advertising copy in every case and destination page was non-compliant.

Non Compliant Advertising

Is the above advert legal? No, absolutely not. While they're made more of an effort than most in publishing the comparison rate, the rate clearly isn't in signature with the interest rate (the comparison rate is, of course, required to be the same size, and in the same location, as the interest rate). This advert comes from an agency that claims a specialty in the finance industry.

We didn't have to obfuscate Hume Bank's branding below because they're a bigger lender that should know better. Their reference to the comparison rate isn't present, nor is it shown anywhere within the advert copy. The 60% LVR is clearly a limitation but it is also shown in a font size and manner that makes it difficult to read. If it's a good product, why hide behind misleading messaging?

Hume Bank

Pictured: Dear Hume Bank, please give us a call so we might provide you with some guidance. If ASIC were aware of an advert like this from a big lender it's highly likely that they would send a warning letter (at the very least).

Offshore Competition

An offshore lead-generation company by the name of Speedy Mortgages engages in what we can only call blatant non-compliance. Further, the fake client testimonials they plaster over their own ads and social channels are supported by a disclaimer on their website that states they "... will often use actors to deliver and present the content that we have received from real clients or partners". So, the testimonials delivered in their already non-compliant advertising includes their name and purports to support their service, but the testimonials were in fact not for their business (it's bizarre for us to think a marketing company would 'steal' testimonials - assuming they're actually real - and use them for a fictitious company - simply illegal). This company is operating in clear contravention to Australian Consumer Law; everything we've seen from them is misleading, false, non-compliant, and completely against consumers' best interests.

Mortgage Buddy and Louder are two offshore organisations that engage in what is very clear non-compliant marketing (not unlike Speedy - the same tactics were used). If you enlist the services of these organisations then the 'catch-all' advertising used to attract consumers into your funnel has led you into a realm of non-compliance.

You should never, ever use an advert that isn't purpose-designed for your own business or upline ACL holder. Failing to take appropriate precautions, or failing to apply the most basic due diligence, will see you experience a world of pain.

I take offence to offshore actors representing Australian brokers when their advertising is non-compliant and somewhat outside the reach of ASIC's grasp. As long as you keep feeding the sharks they'll continue to dig brokers into a world of compliance pain.

I take serious offence with the fact that ethical Australian brokers are competing with offshore 'agencies' that have no regard for Australian consumer law or legislated obligations.

It's Not all Offshore...

There's numerous Aussie companies that claim to provide a licenced service despite no knowledge of the industry, and not unlike some of the offshore actors they've gone so far as to generate fake video testimonials from 'clients'. The Rock My Mortgage adverts should be consulted to see an example of the most non-compliant and low-performing experience in the Aussie marketplace (we've taken dozens of screenshots, and sourced the 'actors' recording testimonials in order to support our claims). We've reported local malfeasance to ASIC ourselves.

Bottom line: the lead-generation space is littered with charlatans that make no attempt to protect the integrity of the business that they represent, and they're using illegal, non-compliant, and predatory measures to lure customers into their pipeline. Is this really an experience you want to support?

Cashback Offers, and Quantifiable Statements

Cashback offers are an interesting area. Consider the following advertisement (similar to hundreds of others that introduce a cashback of some sort):

Principal Mortgage

Pictured: A simple two-line ad. It introduces a rate and cashback in the image. The comparison rate is missing... but is the cashback reference legal?

The pictured advertising is certainly non-compliant in that they didn't deliver a comparison rate to accompany the interest rate. However, it is the reference to the cashback that tickles a fine line of compliance that isn't definitely defined (it's a message that is shared by hundreds of other adverts just like it, including two from the first set of screenshots). Is it legal? The legislation is rather unclear in its wording so our legal advice referred us to the only 'definitive' guidance on the subject... and the source is itself a little vague.

RG234, paragraph 273.63 (published June 2020) states that "[w]e expect that any promotional offer that is quantifiable will be considered as part of the cost of the credit product. For example, a cashback offer, waived fees and a reduced interest rate are all quantifiable. When considering these offers, it is important to be aware of eligibility criteria, exclusions and time limitations".

The pictured advert provides a time limitation but doesn't provide any other qualifying criteria to support the cashback (or interest rate). Since the cashback itself is a clear focus of the advert, the copy is required to provide more qualifying attributes to the borrower. In failing to do so, the broker has published an advert that might potentially land them in a world of hurt.

The legal advice we received was very clear: if you're going to publish a cashback offer it must be accompanied by an interest rate, comparison rate, and qualifying criteria. A more suitable format for text might be a long-form advertisement that has the runway to deliver appropriate messaging.

Regulations state that "[c]onsumers are heavily influenced by advertisements for financial products and financial advice services. Advertisements that do not fairly represent the financial product or its key features and risks, or the nature and scope of the advice service, can be misleading and create unrealistic expectations that can lead to poor financial decisions."

The implications of this statement is clear: disclose everything, and don't leave relevant information behind a click or paywall (email subscription).

Your advertisement can still be amazing without having to feel like you have to navigate legalities or hide behind obscure statements. If the vocational responsibility of a broker is to educate, shouldn't our advertising lean in that direction? It's for this reason that video adverts are often extremely effective.

With the understanding that 'quantifiable' statements require explanation, are any of the adverts below compliant, and can you determine which is manufacture by an offshore lead-generation company?

Non Compliant Facebook Advertising

Trick question. The two adverts on the left are non-compliant in numerous respects, and both are created by a lead-generation agency (although we've taken screenshots of hundreds). It's absolutely not acceptable to put an asterisk next to a figure or statement when the ad, landing page, or Facebook blind itself doesn't provide further details.

How to save $160,000 per year on what sort of loan, and what balance and rate is required to achieve that measure of saving? What about the $5000 per year - it's all such horse-crap information designed to lure clients into a deceptive funnel. The last advert comes from a reasonably reputable company, yet they make a bold claim of saving $94,797 without giving any indication of how those results might be achieved.

These adverts remind me of the now non-existent and extremely low-performing Backpack and Mastery programs - both of which saw us inherit our fair share of disgruntled brokers (we've inherited countless brokers from these sources that have had their Facebook accounts banned for very avoidable and basic Facebook-specific compliance violations). If you're going to provide a quantifiable figure of any kind, or you provide any kind of testimonial, that ad should be accompanied by the criteria used to achieve those results - otherwise its baloney. In some cases, that information may be qualified on the destination landing page, but it must be present.

You already have amazing products - you don't need to lie, use deception, or trickery into generating business.

Why isn't ASIC Paying Attention?

They are paying attention... it's just we can't see it. I've had conversations with investigators that have even said changing the legislation would be easier than changing the industry (although this won't happen). My guess is that ASIC will start to make an example of the most offensive offenders and use them as an example for the rest of the industry.

Finance Digital Representation

A digital marketing agency should never ever introduce non-compliance to a digital business. Introducing non-compliance has the potential to have your ACL revoked, your credit representative status revoked by your upline licence holder, or you might even be expelled from the industry. Sadly, strict liability usually applies with small businesses meaning that your excuses or 'ignorance' won't be accepted as a defence.

The requirements of an ACL are clear, and the advertising requirements are equally documented. Given the widespread nature of non-compliance I'd even suggest upline scrutiny of adverts for non-ACL holders at the aggregation level might be warranted; it's one area of 'unsupervised' compliance that continues to expose itself as an area of broker weakness. It's your ACL that is represented, and it's often represented by dodgy lead-generation services that are treating your ACL with a contempt that makes me seriously pissed.

A digital agency in isolation, or a 'fictitious' brand created by a digital agency for the sake of attracting leads is almost always non compliant. The only entity able to act as the consumer-facing representation of any advertising in any way is the ACL holder or credit representative. Advertising financial services is a privilege afforded to you by way of your accreditations, education, and training, and your involvement in any campaign is governed by legislative oversight.

In every single case where we've encountered 'lead generation' companies, not a single provider has introduced a compliant solution. In fact, in every single case the malfeasance was sufficient to see you fined thousand of dollars and potentially be expelled from the industry. Don't believe us? Ask to see the ads that are drawing consumers into your pipeline. There's another guy in Mackay delivering very clear non-compliant business and a couple in Sydney we'd like to educate on their wayward ways. They're everywhere... and we'll normally end up picking up the pieces.

Customer First Obligations and Best Interest Duty

All broker businesses are bound by legislation to provide a 'Customer First' experience supported by the overarching 'Best Interest Duty' obligation. Everything we've just detailed is completely contrary to this mantra you claim underpins your operation.

Your customer isn't 'first', and your operation isn't acting in the best interest of the client, if unethical, non-compliant, or deceptive means are used to generate business.

At the core of our industry is our obligation to provide genuine customer care. We should endeavour to make this mean something.

Yabber is Compliant

It'd be negligent of me if I didn't give Yabber Tag: yabber a deserving plug.

We'll often describe our digital systems as "the most compliant in the finance industry", and it's the examples above that tends to validate our claims. Certainly, there are numerous areas of compliance that we've introduced that aren't shared by any others companies providing a digital service.

We know, rather categorically, that Yabber is the highest-performing in the industry. Not only is it the only purpose-built digital marketing and social media platform designed specifically for brokers, we'd argue that it is also the only product that is fully compliant, and we achieve this by introducing a full-stack and integrated solution, meaning that your marketing resources are your own marketing assets, and there's no reliance on non-compliant third-party offshore tools.

Compliance isn't limited to just your advertising. It applies everywhere. Your email campaigns (and the messaging within those emails, obviously), your website content, social media, and any other marketing asset potentially introduces you to non-compliance.

And we're still priced lower than competing products.

Note: We're inheriting a large number of brokers that previously used the High Level software that is resold to them via poor representation. It should be noted that in all cases where we've inherited brokers from these programs their advertising and marketing was non-compliant. Please do not simply copy-and-paste or use 'templated' ads or emails without having them assessed by a professional - the individual's introducing this platform can only be described as clueless.

In providing an integrated experience, and supporting that with the only marketing funnel made available to the finance industry, we're introduced a level of marketing excellence that simply cannot be achieved via other means.

Conclusion

Compliance is easy if you follow the published guidance and legislation. Before you publish any advert it is always best to have it assessed by a suitable professional to scrutinise the information. While there's always a fuzzy line that brokers tickle between compliant and non-compliant advertising, it's a line you don't want to navigate - steer clear and have piece of mind that your ads can't be scrutinised in any adverse way.

We've copied what is literally hundreds of non-compliant adverts, many coming from those that claim to provide a 'specialist' service to the finance industry. Unfortunately, the issue is extremely widespread, and the education required to produce compliant (and highly persuasive advertising) is minimal.

If you're new to the advertising scene, of you're unsure about the compliant nature of your marketing, feel free to give us a call so we can assess its suitability for publication. Even if created by another agency (most of which have no understanding how the finance industry is regulated) we will happily provide you with some complimentary guidance.

Any aggregator, franchise, or any other group is invited to call upon us to present a short presentation where we make basic compliance requirements known. We also provide guidance on how to manufacture extremely powerful advertising. This service comes at no cost.

We don't want to see any mortgage broker make mistakes that'll compromise their business in any way.

Featured Image: Staff in front of the Commercial Bank, Johnston & Pack Solicitors and the Bank of Australia Ltd., Kingaroy (South Burnett Region), Queensland, 1915. The Commercial Bank of Australia (CBA) was an Australian and New Zealand retail bank which merged with the Bank of New South Wales bank in 1982, before being renamed to the Westpac Banking Corporation on 4 May 1982. The Bank of Australasia was an Australian bank in operation from 1835 to 1951. The bank merged with the Union Bank of Australia to form the Australia and New Zealand Bank on 1st October 1951. [ View Image ]

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