Intellectual property rights and defamation
Quoting from research or other materials that support your product or service can be a powerful marketing tool. So too is the use of celebrity endorsements, lifestyle images, logos and music. It is likely that these materials will be the intellectual property of another person. If you use the intellectual property of another person without their permission you risk a claim for damages from the owner as well as reputational issues.
When you are using the words, names or images of other persons, check carefully whether you need to get permission from the owner. Always cite your sources if you are relying on technical analysis.
Further, if something you publish harms the reputation of someone else then that person can seek injunctions to prevent the publication and recover damages from you. Before you disparage a competitor's products or services, consider whether anything you plan to say reflects on their reputation in a way that makes it likely people will think less of them as a result.
Specific restrictions on financial services advertising
Surprisingly, the financial services laws contain little direct regulation of advertising. The main disclosure rules are to include a "general advice warning" if the advertisement contains general advice and, if the advertisement refers to a financial product, how the PDS for that product can be obtained. There are also prohibitions on the supply of unsolicited products and services and "bait" advertising.
The Top 12 Problem Words
Here are our top 12 problem words – all of which should only be used with great care.
- 'Independent', 'Unbiased', 'Impartial':
These words, and other words with similar meaning, are prohibited unless the user receives no commission or other volume-based remuneration, or any gifts or benefits from a financial product issuer that might be expected to influence its advice. This is a high bar to leap – although somewhat easier following the FOFA changes prohibiting the receipt of conflicted remuneration.
Contravening this requirement is an offence. Theoretically at least, it is also an offence to use these words in a negative sense (e.g. stating that you are not independent) – although we doubt if there is much usage in that manner.
- 'Bank', 'Stockbroker', 'Insurance Broker':
These words require particular authorisation to use from APRA (in the case of 'bank') and ASIC (in the case of stock, insurance or futures brokers).
- 'Free':
Probably the most misused word of all – which is not surprising given its marketing appeal. A service is not free if it is subsidised through other charges. For example:
- Advice is not "'free" if it is paid for out of fees and costs of financial products clients are placed in as a result of the advice.
- An SMSF trust deed is not "free" if clients must first enter into an administration contract with the provider.
In these situations it is better to describe the "free" product or service as being provided "at no extra cost".
- 'Safe', 'Secure', 'Guaranteed':
If you don't intend to cover any loss your client may incur, then avoid these words as they imply that you will. Be particularly wary of using "guaranteed" as it has a legal meaning which differs considerably from common usage.
- 'Easy', 'Simple':
ASIC considers financial investment to be complicated and tends to regard solutions labelled as being easy or simple as ignoring relevant considerations. For example, it is doubtful that ASIC would consider it to be acceptable for any financial product (perhaps other than a bank account) to be described as "simple".
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.