Banks change ads as ASIC cracks whip
The Commonwealth Bank and HSBC Australia have been using ads for complex financial products, designed for unsophisticated retail investors, which create the impression that those products are simpler and less risky than they are.
The Australian Securities and Investments Commission said it "raised concerns" with the banks about the advertising which forced the banks to change their practices.
In Commonwealth's case, the bank was promoting its "protected loan" product (an interest-only product that allows customers to borrow money to purchase shares in two payments) by comparing it to someone who invests in shares with money that hasn't been borrowed.
The ads stated that protected loan customers could "walk away with no loss" at maturity if the price of their shares fell, but ASIC said that was "potentially misleading" because the costs of the loan and protection had not been considered.
In the case of HSBC Australia, the promotion of some structured financial products on the bank's website created the impression that some of the investments were low-risk, when that "was not the case".
"HSBC claimed that its structured products were suitable for 'traditional deposit investors looking for a way to enhance their returns through exposure to financial markets, but are unwilling to put their capital at risk should the market not perform as expected'," the ASIC website says.
"[But] this statement was inappropriate and potentially misleading due to the risk of capital loss with certain [of the] HSBC structured products being promoted."
It is understood that ASIC will also be taking action against Woolworths Car Insurance for making false claims in its advertising.
Frequently Asked Questions about this Article…
ASIC found some bank advertising to be "inappropriate" and "potentially misleading" because it made complex financial products look simpler and less risky than they really are, prompting the regulator to raise concerns and force changes to the ads.
The Commonwealth Bank and HSBC Australia were forced to change advertising after ASIC said their promotions of complex products created the impression these products were simpler or lower-risk than they actually are, particularly for unsophisticated retail investors.
Commonwealth Bank promoted a "protected loan" (an interest-only product that lets customers borrow in two payments to buy shares) and suggested customers could "walk away with no loss" at maturity. ASIC said that was potentially misleading because the ads didn’t take into account the costs of the loan and the cost of the protection.
ASIC found HSBC Australia’s website promotions created the impression some structured products were low-risk. HSBC described them as suitable for "traditional deposit investors" unwilling to put capital at risk, but ASIC said that was inappropriate and potentially misleading because certain promoted products carried a risk of capital loss.
Yes. The article says ASIC will also be taking action against Woolworths Car Insurance for making false claims in its advertising.
Investors should be cautious because ads can understate complexity and risk. As ASIC highlighted, some promotions omit or downplay loan costs, protection fees or the real risk of capital loss, so advertised claims like "no loss" may not reflect the full financial picture.
Key red flags include claims that make a product seem risk-free (for example "walk away with no loss"), comparisons that ignore borrowing costs, and statements suggesting structured products are suitable for deposit-focused investors despite risks of capital loss.
If an ad seems misleading, check the product’s full terms and costs, look for any mention of protection fees or loan costs, ask the provider for clear explanations of risks (including capital loss), and consider seeking independent financial advice before investing in complex products.
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