The Advertising Standards Authority (ASA) released a new Financial Advertising Code (Code) that comes into effect for new advertisements on 1 March 2022, and on 1 June 2022 for all advertisements, replacing the existing Code for Financial Advertising. A copy of the new Code can be found here.

Advertising in New Zealand is regulated by the ASA Codes and its complaints process, working within the regulatory framework provided by a number of Acts and Regulations. The ASA administers the independent complaints and appeal boards that hear complaints and appeals regarding advertisements in New Zealand. Although membership to the ASA is voluntary, the majority of stakeholders in the media and advertising sectors are ASA members.

Advertising and Advertisement(s) means 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. Financial Advertising is Advertising for the purpose of promoting a Financial Product or Service.

Financial Products or Services are any product or service relating to insurance, banking, credit, investment, payment services, financial or risk management, foreign exchange or advice or educational services.

The regulatory framework for financial advertising includes the Financial Markets Conduct Act 2013 (e.g. financial advisory and fair dealing provisions), and Credit Contracts and Consumer Finance Act 2003 (e.g. provisions on the protection of consumer interests).

Who does this new code apply to?

This new code applies to all Financial Advertising and parties to an advertisement, including the advertiser, agencies and media organisations. Financial Advertising includes (but is not limited to) advertising Financial Products or Services in any of the following media: television (including on-demand television), radio, print, out of home (billboards, bus shelters and buses, etc.), cinema, digital, email, websites, social media (including user-generated content), influencers, videos, apps, advergaming, addressed and unaddressed mail, brochures and point-of-sale material.

The new Code gives businesses greater clarity about the scope of Financial Advertising, by:

• Defining Financial Products or Services, and
• Providing that in order for Financial Advertising to be caught by the Code, the advertising must promote Financial Products or Services,

and sets out two principles (Social Responsibility and Truthful Presentation) and three rules that advertisers, agencies and media must follow when advertising Financial Products or Services.

The Code also provides useful examples for the industry stakeholders to refer to if they’re not sure whether their products and/or services are Financial Products or Services under the Code.

Social Responsibility

The principle of Social Responsibility is embodied in the Code and its rules. In interpreting the Code, emphasis must be placed on complying with both its spirit and intention.

Financial Advertising must be prepared and placed with a high standard of social responsibility to consumers and society. The rule under this principle requires advertising to be easily understood by consumers. To achieve this, the Code provides the following guidelines:

• All relevant and required information must be disclosed.
• Care must be taken to ensure that key disclosed information is understood in proportion to the importance of that information. Written text must be large and clear enough to be readable. As well as that, spoken language must be presented clearly and at a pace able to be understood by consumers.
• Financial advice may only be included in Financial Advertising content from licensed individuals or entities.
• Financial Advertising posted online by entities that are not licensed financial advice providers must also comply with the Principles and Rules in the Code.
• Advertisers and their agents are also responsible for ensuring user-generated comments, reviews testimonials and endorsements comply with the Code when they form part of the advertisement.

Truthful Presentation

Financial Advertising must be truthful, balanced, and not misleading.

This principle provides two rules for Financial Advertisements.

First rule

The first rule reiterates that Principle 2 of the Advertising Standards Code (ASC) applies, but excludes obvious untruths, exaggeration, puffery or deliberate hyperboles in regard to financial claims from acceptable advertising. In addition to the ASC, the content of Financial Advertising must not take advantage of consumers’ inexperience, lack of knowledge or financially vulnerable situation.

Essentially, these differences to the ASC guidelines ensure that Financial Advertisements are as close to the truth as possible, not allowing advertising parties to exaggerate or capitalise on their consumers’ lack of knowledge.

Second rule

The second rule under the Truthful Presentation Principle relates to the use of data. Advertisements must not use tests, surveys, research results or quotations from technical and scientific literature in a manner that is misleading or deceptive.

Similar to the first rule, the full guidelines for this rule are set out in the ASC. In addition to this, Financial Advertising must not:

• Portray unrealistic or exaggerated financial expectations or outcomes;
• Provide incomplete information such that the advertising is misleading. An example of this is failing to include complete information such as the losses, negatives or risk in any investment; or
• State or imply that Financial Products or Services are safe or free from risk or understate the level of risk associate with them.

Financial Advertising which uses examples of past performance must make it clear that it does not reliably indicate future performance. Technical language and statistics are acceptable in Financial Advertising, so long as they are relevant and easily understood by non-expert consumers without special knowledge.

Financial Advertising should be a truthful depiction of the Financial Product or Service advertised.

What does this mean for you?

The purpose of this Code is to make sure all Financial Advertising is presented in a way that demonstrates a high standard of social responsibility. The Code requires advertisers to ensure that all Financial Advertisements disclose all relevant information and is done so in a way that truthfully represents the Financial Product or Service.

This must be observed holistically, meaning that the principle of social responsibility is in the spirit of the entire Code and a breach can arise from a breach of the principles alone, rather than a breach of the rules.

Reach out to us if you have any questions about the new Code. You can count on our experience and skill in providing practical advice to ensure your advertisements are compliant with advertising standards and codes. Get in touch with Hayley Miller, Liz Lim if we can help you with advertising issues in this space.