“Brokers should assume that advertising and marketing practices are firmly on ASIC’s radar'
Mortgage brokers are being urged to take care with how they advertise and market their services on social media platforms like TikTok and Instagram amid increasing scrutiny from the Australian Securities and Investments Commission (ASIC) over how financial products and services are promoted.
For the first time since its implementation in 2012, ASIC is mulling updates to ‘Regulatory Guide 234’, which sets out guidance and good practice for promoters of financial products and financial advice services, including credit products and credit services.
Proposed changes include:
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Add guidance and examples reflecting ASIC enforcement and regulatory action on advertising since 2012
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Incorporate the content of Regulatory Guide 53 – ‘The use of past performance in promotional material’, consolidating all advertising guidance in one place, after which RG 53 is proposed to be withdrawn
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Modernise and streamline the guide, including to better address digital advertising channels and social media ‘finfluencers’
Anja Pannek, chief executive of peak broking body the Mortgage and Finance Association of Australia (MFAA), warned brokers to take particular note of the third proposal.
“Brokers should assume that advertising and marketing practices are firmly on ASIC’s radar,” Pannek said. “Even well-intentioned content can create compliance risk if it is unclear, over-simplified or taken out of context, particularly online.”
“We know the use of social platforms is an important element of how brokers engage and attract clients,” Pannek added. “Consumers are also increasingly using social platforms to educate themselves."
Read more: ‘Property spruikers’ taking advantage of unintended loophole, says Macquarie Bank
MFAA urges rethink on broker guidance
During the consultation window, which has now closed, ASIC welcomed feedback from various industry bodies, including the Mortgage and Finance Association of Australia (MFAA).
“Overall, the MFAA supports ASIC’s objective of ensuring that financial and credit advertising does not make false or misleading statements or otherwise mislead or deceive consumers, and that advertising gives a balanced view of product features, benefits and risks,” said the peak broking body in its submission.
But the MFAA took aim at some of the language surrounding mortgage brokers in the current guidance.
“Stating that a broker ‘generally only considers one or two main lenders’ does not reflect standard broker practice and does not align with the expectations set out in ASIC’s BID (Best Interests Duty) guidance of what constitutes appropriate conduct under the duty,” it said.
“We recommend ASIC update this example to reflect that brokers draw from a broad panel of lenders and consider multiple loan options as part of their best interests assessment. Advertising guidance should focus on the accuracy of claims about panel breadth and independence, rather than suggesting that brokers typically consider only one or two lenders.”
The MFAA also noted that there is currently no explicit guidance in RG 234 addressing the use of the terms ‘mortgage broker’ or ‘finance broker’ in advertising, “despite mortgage broking being a licensed and highly regulated activity under the National Credit Act. This contrasts with the more detailed treatment in other financial services contexts of how titles and role descriptions may influence consumer understanding and expectations”.
