The Financial Markets Authority (FMA) has published new guidance on how firms should advertise financial products.
The new guidelines follow consultation the regulator conducted last year and reflect feedback. The FMA outlined three principles for organisations advertising their financial products or services: impressions the ad creates, ensuring it includes relevant information and no misleading or deceptive omissions and ensuring all claims are substantiated.
The new rules specify that ads of financial products should be truthful and accurate, take care when comparing different products, and balance risk and reward, among others.
Liam Mason, FMA General Counsel, said:
Advertising can significantly influence people’s investment decision making, so it’s critical that firms’ marketing materials don’t mislead or confuse consumers.
The FMA noted in its announcement that the format of some ads is limited like banners on social media platforms and webpages. The regulator expects firms to ensure ‘click through’ ads landing pages are consistent and they do not create a misleading impression.
Mason added:
We want firms to provide a balanced message so the overall impressions and expectations formed by investors are realistic. For example, advertisements must not state, imply, or otherwise give the impression that a financial product is safe or free from risk, or returns are guaranteed where this is not or cannot be substantiated.
In all aspects of the advertising, substantiating your claims is paramount. This means having a reasonable basis for the representation when it is made. Anecdotal evidence, unsupported opinions and assumptions do not constitute a reasonable basis. We are particularly interested in representations in advertisements regarding the nature, suitability and characteristics of a financial product.
