Marketing « Australian Regulatory Compliance Review from Langes+ Lawyers

May 4, 2012

Misleading use of “independent” by insurance brokers

ASIC has announced that in a recent surveillance project, it found 21 instances of insurance brokers and financial planners making statements about the independence of the licensee or the services they provide in breach of the Corporations Act. The relevant financial services licensees have now voluntarily complied with ASIC’s request to remove or amend the statement in each of the 21 instances.

AFS licensees are prohibited from using the terms, ‘independent’, ‘unbiased’ or ‘impartial’ if they receive commission or volume-based payments.

The licensees identified included 17 general insurance brokers, 3 financial planners and 1 life broker. In one instance, the statement was found on the website of an authorised representative.

AFS licensees must ensure that statements made by representatives in any published material comply with the relevant provisions of the Corporations Act.

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Posted 4th May 2012 by David Jacobson in Corporations Act, Financial Services, Insurance, Marketing

May 2, 2012

Privacy case note: A and Financial Institution

In A and Financial Institution [2012] AICmrCN 1 the Privacy Commissioner dealt with a complaint from a customer of a financial institution that a mobile phone number provided for security purposes in an internet banking application was used 5 years later by a company marketing insurance products for the financial institution.

The financial institution did not deny the complainant’s claims that the complainant had provided their mobile phone number for security identification purposes. The Commissioner considered the context of the collection of the mobile phone number, and took the view that the primary purpose of collection was to provide extra security protection for banking transactions. The Commissioner took the view that disclosing the mobile phone number for the secondary purpose of enabling the direct marketing company to contact the complainant was not related to the primary purpose of collection.

The financial institution advised the Commissioner that it sent the complainant a letter about its insurance products a week before the complainant received the telephone calls. A notice in fine print at the back of the letter stated that the financial institution would send the complainant’s mobile phone number to the financial institution’s contract company, to call the complainant, unless the complainant contacted a specified number to advise they wanted to be excluded from the calling program.

The financial institution considered that, because the complainant had not responded to the letter by calling to advise it did not want to participate in the calling program, it was entitled to assume that its disclosure of the complainant’s personal information, including the mobile phone number, was within the complainant’s reasonable expectations.

The parties conciliated the matter. To resolve the matter the complainant accepted a letter of apology and assurances from the financial institution that the complainant would not be included in any future marketing campaigns. The financial institution also undertook to conduct a review of its marketing campaign procedures.

The Commissioner accepted that the complainant was unlikely to have closely read the correspondence as the letter sent by the financial institution was about a service that the complainant was not interested in receiving from that organisation.

Further, the Commissioner noted that the information aimed at advising the recipient of the intention to disclose the mobile number for direct marketing purposes was included as part of additional information located on the back of the correspondence. This information entitled ‘Important Information’, was not only on the back of the correspondence but was also in extremely small font which could seem contrary to it being important information.

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Posted 2nd May 2012 by admin in Financial Services, Insurance, Marketing, Privacy

March 22, 2012

Do Not Call registrations to be extended

The Do Not Call Register (Duration of Registration) Specification (No. 1) 2010 (Amendment No. 1 of 2012) extends the current registration period for domestic telephone numbers from 5 years to 6 years.

The Register commenced on 31 May 2007 and the Do Not Call Register Act initially prescribed numbers entered on the Register were to remain in force for three years. The term was later changed to 5 years and numbers will begin to automatically fall off the Register from 31 May 2012 if they are not re-registered.

The Government is currently examining options for maintaining the accuracy of the Register without the need for periodic re-registration. The extension of the registration period by an additional twelve months will allow further time for a detailed consideration of these options.

The Specification extends the period for which numbers on the Register remain in force to six years, and operates to:

automatically extend the registration period for numbers on the Register at the time the Specification commences so that their registration remains in force for six years from the date of their registration; and
provide that numbers registered subsequent to the commencement of the Specification have a registration period of six years.

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Posted 22nd March 2012 by David Jacobson in Do Not Call Register, Marketing

February 15, 2012

ASIC good practice guide on advertising financial products and advice services

ASIC has released RG 234 Advertising financial products and advice services: Good practice guidance (RG 234) setting out its views on the obligations of financial service providers to not make false or misleading statements or engage in misleading or deceptive conduct under the Corporations Act and the ASIC Act.

Who it applies to
ASIC’s guidance applies to:
• promoters of financial products and financial advice services. The promoter will sometimes be the product issuer, but can also be a third party such as a financial adviser, distributor or agent; and
• publishers of promotions about financial products and financial advice services.

Promoters who hold an AFS licence must comply with the ASIC Act to meet their obligation to comply with financial services laws: s912A(1)(c).

What products it applies to
ASIC’s guidance applies to all types of financial products, including:
• investment products;
• risk products;
• non-cash payment facilities; and
• credit facilities.

Although references to ‘financial products’ in this guide mean financial products as defined in the Australian Securities and Investments Commission Act 2001 (ASIC Act) and therefore include credit facilities (see s12BAA, ASIC Act) the guide focuses primarily on advertising of investment and risk products and financial advice services. Different considerations apply for advertising of credit products and services, and ASIC plans to issue additional guidance for credit providers and credit service providers under the National Consumer Credit Protection Act 2009 (National Credit Act).

The good practice guidance also applies to advertising of both general and personal financial product advice. References to ‘financial advice services’ in the guide mean the provision of financial product advice as defined in the ASIC Act: see s12BAB(5).

What the guidance covers
The guidance covers:
• the nature of the product;
• returns, benefits and risks;
• warnings, disclaimers, qualifications and fine print;
• fees and costs;
• comparisons;
• past performance and forecasts;
• use of certain terms and phrases (e.g. ‘free’, ‘secure’ and ‘guaranteed’);
• the advertisement’s target audience;
• consistency with disclosure documents;
• photographs, diagrams, images and examples; and
• the nature and scope of advice.

What media it applies to
It applies to advertising communicated through any medium in any form, including:
(a) magazines and newspapers;
(b) radio and television;
(c) outdoor advertising, including billboards, signs at public venues, and transit advertising;
(d) the internet, including webpages, banner advertisements, video streaming (e.g. YouTube), and social networking and microblogging (e.g. Twitter);
(e) social media and internet discussion sites;
(f) product brochures and promotional fact sheets;
(g) direct mail (e.g. by post, facsimile or email);
(h) telemarketing activities and audio messages for telephone callers on hold; and
(i) presentations to groups of people, seminars and advertorials.

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Posted 15th February 2012 by David Jacobson in Compliance, Corporations Act, Financial Services, Funds, Insurance, Investments, Marketing, Superannuation

November 4, 2011

Telemarketing and Research Calls Industry Standard

The Telecommunications (Do Not Call Register) (Telemarketing and Research Calls) Industry Standard 2007 has been amended by the Telemarketing and Research Calls Industry Standard Variation 2011 (No. 1) to regulate calls that involve a recorded or synthetic voice and to require certain information to be provided when making a telemarketing or research call, including details of where the person calling obtained the Australian number called.

When a caller makes, or causes to be made, a telemarketing call involving recorded or synthetic voices, the caller must ensure that a mechanism to enable the call recipient to request information is provided during the call.

A caller must ensure that calling line identification is enabled at the time that the caller makes or attempts to make a call, or causes a call to be made or attempted to be made. A caller must not block the transmission of the calling line identification to any calling number display or any calling name display of a call recipient who receives the call.

Callers must make reasonable efforts to ensure that when calls are made, the number which is transmitted to the calling number display of the receiver terminals is a telephone number which is suitable for return telephone contact by a call recipient. The call recipient may be advised of the facility to request such information by pressing a button to talk to an operator or to obtain further details about the call, the caller and/or the entity that is causing the call to be made.

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Posted 4th November 2011 by David Jacobson in Marketing

October 18, 2011

Regulation of gift cards

On 3 June 2011 the Ministerial Council on Consumer Affairs resolved to review the regulation of gift cards (Read Communique).

Issues identified by consumer advocates, such as Choice, included:

access to unused value on expired cards
hidden fees and charges
lost/stolen cards
cards not honoured by administrators of insolvent issuers
requirement for a minimum threshold spend

No details of proposals for regulation have been released yet.

Current regulation
At its simplest a gift card is a transferable prepaid card.

They are currently regulated on a limited basis by the ePayments Code but they are exempt from the Corporations Act financial services provisions.

ePayments Code
If a financial institution which subscribes to the Code does not know the identity or contact details of a holder of a gift card (eg where they received it as a gift from the buyer), it must instead provide the holder with a means to access balance and transaction information.

Corporations Act
ASIC regards gift cards potentially as “financial products” but has given relief (under RG 185 and CO/05-738) for gift vouchers and cards from the financial services licensing, conduct and disclosure obligations of the Corporations Act (together with the hawking prohibition).

This relief applies where the gift voucher or card has the following characteristics:
(a) it has the ability to store monetary value, which is not redeemable for cash, except where amounts unlikely to be conveniently used under the facility are permitted to be withdrawn;
(b) it is not reloadable (i.e. a client can only make one payment for the gift voucher or card and no person can make additional payments that increase the value of the gift voucher or card, after it is initially acquired);
(c) it can be used on multiple occasions;
(d) it is marketed solely as a gift voucher or gift card; and
(e) where it is subject to an expiry date, appropriate arrangements are in place to prominently disclose that expiry date.

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Posted 18th October 2011 by David Jacobson in Corporations Act, Financial Services, Marketing

October 12, 2011

Telemarketing outsourcing agreements

If you enter into an agreement with another party to make calls for your business, you must ensure that they are aware of their responsibility to comply with the Do Not Call Register Act (DNCR Act).

Under section 12 of the DNCR Act, you must include an express requirement in the agreement that they comply with the DNCR Act.

You should also be aware that under section 139 of the Telecommunications Act 1997, you must include an express requirement in your telemarketing or fax marketing agreements that the other party must comply with Part 6 of that Act, which concerns industry codes and standards.

The current relevant industry standard is the Telecommunications (Do Not Call Register) Telemarketing and Research Calls) Industry Standard 2007.

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Posted 12th October 2011 by David Jacobson in Do Not Call Register, Marketing

September 13, 2011

Do Not Call Register Act breach penalty

In Australian Communications and Media Authority v FHT Travel Pty Ltd [2011] FCA 550 the Federal Court found that FHT Travel Pty Limited (FHT Travel) and its sole director Yvonne Earnshaw breached the Do Not Call Register Act 2006 by making, or causing to be made, more than 12,000 marketing calls in less than a month to people who had placed their telephone numbers on the Do Not Call Register.

The Court ordered FHT Travel to pay a civil penalty of $120,000 to reflect the serious nature of the offence. Injunctions were granted restraining both FHT Travel and Ms Earnshaw from being engaged in any business which relies upon the regular use of telemarketing calls, without first advising ACMA in writing of its or her intention to do so, and providing such information concerning that involvement as ACMA may reasonably require, for a period of five years.

No penalty was imposed on its sole director as she was bankrupt.

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Posted 13th September 2011 by David Jacobson in Do Not Call Register, Marketing

August 30, 2011

ASIC guidance for the advertising of financial products and financial advice

ASIC has released a consultation paper and draft regulatory guide containing proposed best practice guidance for the advertising of financial products and financial advice.

Who it applies to
ASIC proposes that its guidance applies to:
• promoters of financial products and financial advice services. The promoter will sometimes be the product issuer, but can also be a third party such as a financial adviser, distributor or agent; and
• publishers of promotions about financial products and financial advice services.

What products it applies to
ASIC proposes that its guidance applies to all types of financial products, including:
• investment products;
• risk products;
• non-cash payment facilities; and
• credit facilities.

Its guidance would also apply to both general and personal financial product advice.

ASIC proposes to issue, at a later date, additional guidance for credit providers and providers of credit services under the National Credit Act.

What the guidance will cover
The guidance will cover:
• the nature of the product;
• returns, benefits and risks;
• warnings, disclaimers, qualifications and fine print;
• fees and costs;
• comparisons;
• past performance and forecasts;
• use of certain terms and phrases;
• the advertisement’s target audience;
• consistency with disclosure documents;
• photographs, diagrams, images and examples; and
• the nature and scope of advice.

The draft guidance contains examples of the issues ASIC is concerned about.

What media it will apply to
The guide will be directed at promoters in developing advertisements for specific media, including:
• mass media, such as radio, television, newspapers, magazines and internet (including social media);
• telemarketing activities and audio messages for telephone callers on hold;
• direct mail (e.g. by post, facsimile or email);
• presentations to groups of people, and advertorials; and
• outdoor advertising.

Comments on the consultation paper and draft regulatory guide are due by 25 October 2011.

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Posted 30th August 2011 by David Jacobson in Corporations Act, Financial Services, Marketing

July 10, 2011

Case note: ACCC v Optus $5.26 million misleading ads penalty

In Australian Competition and Consumer Commission v Singtel Optus Pty Ltd (No 4) [2011] FCA 761 Optus was ordered to pay to the Commonwealth a pecuniary penalty of $5.26 million for misleading advertisements (Optus 1 was previously discussed here).

The penalty followed previous orders for injunctions and corrective advertising in Optus 2 and Optus 3.

Judge Perram considered the mandatory and non-mandatory factors relevant to determining a penalty, including the deliberateness of the conduct including its failure to adequately review its compliance program as previously underaken. Although there was no deliberate fraud, it is clear that Optus’ compliance program was ineffective. Judge Perram examined the process in detail (see below).

It is instructive to understand how the penalty was calculated as well as the implications of Optus failing to implement an effective advertisement vetting process.
(more…)

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Posted 10th July 2011 by David Jacobson in Compliance, Consumer Law, Marketing, Trade Practices