The revised Financial Advertising Code, to come into effect on 1 March 2022, will apply to all advertisements for financial products and services across all media – including cryptocurrencies and share trading platforms.
The Code, prepared by the Advertising Standards Authority (ASA), will complement the Financial Market Authority’s guidance on “Advertising offers of financial products under the FMC Act”, which was released in October 2021.
Financial advertising is defined in the Code as:
any message, the content of which is controlled directly or indirectly by the Advertiser, expressed in any language and communicated in any medium with the intent to influence the choice, opinion or behaviour of those to whom it is addressed and is for the purpose of promoting a Financial Product or Service.
The definition is broad, and captures the full range of financial products and services. The ASA’s intention is that this definition will be clearer for industry and consumers to understand.
The Code is structured around two primary principles.
- Social Responsibility, requiring that financial advertising is “prepared and placed with a high standard of social responsibility to consumers and society”. Under this principle sits the rule that financial advertising must be easily understood by consumers.
- Truthful Presentation, requiring that financial advertising must be “truthful, balanced and not misleading”. Under this principle sit two rules:
- financial advertising must not mislead, deceive or confuse consumers, abuse their trust or exploit their lack of knowledge, and
- financial advertising must not use tests, surveys, research results or quotations from technical and scientific literature in a manner that is misleading or deceptive.
The ASA states that it is possible to breach the principles or spirit of the Code without breaching a specific rule. Financial advertisers will need to keep this in mind in their application of the Code. They should also be mindful of the full panoply of regulations applying to their advertising conduct, in particular the FMA’s guidance on advertising offers of financial products and their obligations under the broader Advertising Standards Code and the Financial Markets Conduct Act.
The new Code comes into effect from 1 March 2022 for all new financial advertising (i.e. all financial advertisements released after this date that have not already been released to the public), and 1 June 2022 for all financial advertising.
If you would like more information on the new Code and what is required from your organisation for compliance, please contact one of our listed experts.