ASIC has confirmed it has its eye on the Industry SuperFunds (ISF) re-launched “compare the pair” campaign due to a series of complaints about the advertisement being misleading.
The controversial ISF campaign first hit Australian television in 2005 and was subject to an ASIC investigation after a barrage of complaints.
ASIC’s subsequent preliminary view was that the advertisements were likely to mislead or deceive and that the advertising campaign should cease.
Without accepting ASIC’s view, ISF agreed to suspend its campaign in order to address the concerns raised.
But in February this year, the campaign raised its head again, and the ISF launched a new take on the “compare the pair” advertisements.
The new campaign highlights a difference in the performance between an industry and a retail fund.
In an oversight of ASIC at the Parliamentary Joint Committee (PJC) for corporations and financial services last week, ASIC commissioner Greg Tazner was questioned about whether the commission is addressing complaints about the new campaign.
“In terms of the advertising, I know back in 2005 that 'Compare the Pair' ad campaign was pulled up because of what was essentially misleading advertising. That issue is again being raised,” chair Senator David Fawcett said.
He continued that in particular, concerns have been raised around the fact that the disclosure in the form of the very fine print for the average consumer means “absolutely nothing”.
“I have seen, for example, calculations clearly by people who are supporting retail funds where they show that a retail fund's performance for a given set of conditions clearly exceeds that of the average industry fund, let alone some particular industry funds, yet the advertisement would lead the average person to believe that every industry fund is going to deliver a better outcome than a retail fund for all the various reasons that they say,” he said.
Tanzer replied that although he was unable to talk further about the issue, he could confirm that ASIC is looking at the campaign in the context of the complaints that have been made to ascertain whether it is fair or misleading.
In a press release after the launch of the new campaign, Industry Super Australia’s (ISA) CEO David Whiteley said it will strengthen Australians’ awareness about how they can protect and grow their super savings.
“Allowing financial advisers to once again receive a range of sales commissions will eat into the savings of many Australians, and that’s something consumers should take into account when they’re thinking about which fund offers the best performance”, he said.
Whiteley pointed to a comparative analysis of fees together with investment performance over the last decade that show that Industry SuperFunds provide substantially better value to members on average than the retail super fund sector.
He added that Industry SuperFunds don’t pay sales commissions to advisers, and have low fees.
To justify the difference between the “misleading” old ISF campaign and the new one; the press release stated that unlike the original campaign, which used forward projections to estimate the impact of on-going sales commissions on a person’s super account balance at retirement age, the new one uses a model which looks back over the last ten years to compare average net returns that Industry SuperFunds could have delivered their members, compared to the average delivered by retail funds.