New Zealand’s Financial Markets Authority (FMA) issued fresh guidelines around the advertisement of financial products on Wednesday. This will directly affect brokers that are operating in the country with Derivative Issuer (DI) licenses.
The refreshed rules stressed that financial service providers need to focus on three key aspects: overall impression created by the initial advertisement, inclusion of all relevant information and substantiated claims.
“Advertising can significantly influence people’s investment decision-making, so it’s critical that firms’ marketing materials don’t mislead or confuse consumers,” said FMA General Counsel, Liam Mason.
The new rules came after the regulator consulted on proposed guidance on advertising last year.
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It focuses on ‘fair dealing’ requirements of the Financial Markets Conduct Act and stressed that advertisements must be truthful and accurate, take care when comparing different products, and balance risk and reward, among others.
All Scenarios Considered
Moreover, the guidelines considered the limited advertising real-estate on digital platforms like website banners and social media. It mandated firms to use landing pages to display elaborated advertisements and the ‘click through’ ads should not create a misleading impression. In addition, companies have to ensure that messaging in both the initial ad and landing page must be consistent.
“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,” Mason added.
“In all aspects of 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.”