Watchdog to target rural finance

THE corporate watchdog is stepping up its scrutiny of advertisements for financial services in regional Australia, including mining boom towns, in a bid to weed out unscrupulous operators.

By InvestSMART · 16 Apr 2012

By InvestSMART ·
16 Apr 2012

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THE corporate watchdog is stepping up its scrutiny of advertisements for financial services in regional Australia, including mining boom towns, in a bid to weed out unscrupulous operators.

West Australian and Queensland mining areas including Kalgoorlie and Mount Isa are among areas to be targeted, along with the fraud hot spot, the Gold Coast, tender documents show.

The Australian Securities and Investments Commission will monitor print, radio and television advertising covering almost every product available to retail consumers for which it is responsible. An ASIC spokesman said advertising had a "significant role" in determining consumer choices and the watchdog had a "strong focus on ensuring advertising is not misleading and encouraging good practice in advertising".

"The current exercise is to enhance the coverage of regional media again, including electronic and print publications," he said.

ASIC is seeking a media monitoring outfit able to provide investigators with access to a searchable, regularly updated database of print, radio and TV ads from around the country, the tender documents show.

It wants to monitor ads for credit, including home loans, bank accounts and term deposits, superannuation, insurance, investment products including managed investment schemes and margin loans, and share-based products including derivatives and contracts for difference.

In addition to mining areas, ASIC is also increasing surveillance of the Gold Coast, where the federal and Queensland police are running a joint investigation into a series of share scams run out of call centres.

The advertising blitz was foreshadowed in February by ASIC commissioner Peter Kell, a consumer protection veteran who joined ASIC in October last year after a stint as deputy chairman of the Australian Competition and Consumer Commission.

"Irrespective of whether it's a region that has a larger proportion of retirees, a mining town, or a remote indigenous community, we should see financial products and advice marketed in a responsible and accurate fashion," Mr Kell told an Association of Superannuation Funds of Australia lunch.

"We know from past experience that sometimes these communities are targeted by unscrupulous promoters."

He warned financial services promoters that ASIC had recently been granted new powers to issue public warnings and, through the courts, to seek civil penalties of up to $1.1 million for each advertisement that is adjudged misleading.

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Frequently Asked Questions about this Article…

What is ASIC doing to step up scrutiny of regional financial services advertising?

The Australian Securities and Investments Commission (ASIC) is increasing surveillance of financial services advertising across regional Australia. It plans to monitor print, radio and television ads to weed out unscrupulous operators and to make sure advertising is not misleading and follows good practice.

Which regional areas are being targeted by ASIC's advertising monitoring?

ASIC is targeting regional and mining boom areas such as Kalgoorlie and Mount Isa in Western Australia and Queensland, as well as the Gold Coast (a known fraud hot spot). The focus also covers communities with high proportions of retirees and remote indigenous communities that can be targeted by promoters.

What types of financial products will ASIC monitor in regional ads?

ASIC will monitor advertising for a wide range of retail products, including credit products (home loans, bank accounts and term deposits), superannuation, insurance, investment products such as managed investment schemes and margin loans, and share‑based products including derivatives and contracts for difference (CFDs).

Which media channels will ASIC monitor for misleading financial advertising?

ASIC will monitor print, radio and television advertising across the country. The watchdog is looking for a media monitoring service that provides investigators with a searchable, regularly updated database of ads from these channels.

What new powers does ASIC have to act against misleading regional ads?

ASIC has recently been granted powers to issue public warnings about products or promoters. Through the courts it can also seek civil penalties of up to $1.1 million for each advertisement that is adjudged to be misleading.

Why are the Gold Coast and mining towns singled out for increased ASIC surveillance?

The Gold Coast and certain mining towns are highlighted because they have been associated with share scams and can be targeted by unscrupulous promoters. ASIC and other authorities have identified call‑centre run scams and other risks in these areas, prompting closer monitoring.

How will ASIC's media monitoring system help investigators review regional advertising?

ASIC is seeking a media monitoring outfit that can deliver a searchable, regularly updated database of print, radio and TV ads from around the country. This will give investigators faster access to advertisements for review and enforcement action where ads appear misleading.

What does increased ASIC scrutiny of regional financial advertising mean for everyday investors?

For everyday investors in regional Australia, the increased scrutiny means advertising should be more closely checked for accuracy and responsibility. ASIC's focus and its new powers to issue warnings and seek penalties aim to reduce misleading ads and protect consumers from unscrupulous promoters.