Watchdog forces banks to dump 'inappropriate' margin lending ads
Commonwealth Bank and HSBC Australia have been using ads for complex financial products, designed for unsophisticated retail investors, which create the impression those products are simpler and less risky than they are. The Australian Securities and Investments Commission said it "raised concerns" about the ads, which forced the banks to change their practices.
The Commonwealth Bank was promoting its "protected loan" product (an interest-only product that allows customers to borrow money to buy shares in two payments) by comparing it to someone who invests in shares with money that hasn't been borrowed.
The ads said 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 not been considered. With HSBC Australia, the promotion of some structured financial products on its website created the impression some of the investments were low-risk, and comparable to relatively safe investments such as bank deposits, when that "was not the case".
Frequently Asked Questions about this Article…
The Australian Securities and Investments Commission (ASIC) found advertising by two banks was inappropriate and potentially misleading, and it raised concerns that forced those banks to change their advertising practices.
Commonwealth Bank and HSBC Australia were the two banks cited by ASIC and required to alter how they promoted certain complex financial products.
ASIC said Commonwealth Bank’s ads created the impression the protected loan was simpler and less risky than it is, including claims customers could ‘walk away with no loss’ at maturity without clearly accounting for loan costs and protection fees.
The article describes the protected loan as an interest‑only product that allows customers to borrow money to buy shares in two payments.
ASIC found HSBC Australia’s website promotions made some structured products appear low‑risk and comparable to safe investments like bank deposits, when that was not the case.
No — ASIC specifically flagged that the ads gave the impression some complex products were as low‑risk as bank deposits, but said that impression was misleading and not accurate.
Watch for claims that suggest no losses or that compare complex products directly with investing your own money or with bank deposits, and be cautious if ads don’t clearly state loan costs, protection fees, or product risks.
ASIC’s intervention led the Commonwealth Bank and HSBC Australia to change their advertising practices for the products identified as potentially misleading.
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