Senior associate Kristy McCluskey reports ASIC has put responsible entities on notice that they must ensure advertising of managed investment products is 'true-to-label' and is clear, balanced and accurate. The warning comes as part of ASIC's risk-based surveillance of advertising material, website disclosure and product disclosure statements of managed funds and is a key focus of ASIC's Interim Corporate Plan 2020-21.

ASIC surveillance

Following surveillance undertaken by ASIC, the corporate regulator was of the view that advertisements for several registered funds provided inaccurate and unbalanced information to investors. ASIC expressed concern about—

• unbalanced comparisons of some aspects of funds (eg higher returns) without also highlighting the key differences and risks
• safety and stability representations promoting funds as having little or no risk of capital loss, despite the fund's underlying assets being considerably risky and volatile
• withdrawal representations giving the impression withdrawing funds on short notice is easy, where the liquidity of the fund assets does not support this claim.

True-to-label advertising

ASIC warns investors to be wary of investment advertising that is not true-to-label, such as advertising comparing fixed-term investment products to bank term deposits. ASIC is particularly concerned with advertising which suggests investment in a fixed-term investment product is an 'alternative' or 'substitute' for a fixed-term deposit, as ASIC views these two products as having very different risk profiles.

Whether ASIC's position on the advertising targeted is correct or not, there is no doubt the regulator will continue its surveillance as a priority in line with its Interim Corporate Plan 2020-21 to ensure investment advertising is true-to-label by actively—

• monitoring advertising and website promotions of managed investment schemes
• testing advertising and promotions against formal disclosure documents, constitutions, and underlying assets
• taking regulatory action as necessary where advertising and promotions are not consistent with the underlying documents and fund assets.

How can we help?

ASIC's crackdown on investment advertising means fund managers need to test whether their advertising is true-to-label. We can help with reviewing your advertisements and answering any queries you may have about meeting ASIC's requirements.