Insurance disclosure in light of ASIC’s crackdown

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The Australian Securities and Investments Commission (ASIC) have recently been cracking down on what they see to be misleading advertisements. They are dedicated to protecting investors, and have been hitting companies left and right with infringement notices.

This is not the first fining spree they’ve gone on, but several targeted companies (Mortgage Choice, Myrate, and the latest, Media Super) feel that the financial penalty is a bit of an overreaction.

Media Super was issued an infringement notice that comes with a $10,200 fine for issuing a fact sheet
that made their product seem like a better alternative than privately managed insurance. The problem was that they failed to include some information about fees they charge.

Once informed of their violation and the accompanying fee, Media Super immediately changed the information, paid the fine, and issued a statement. They cooperated fully, but did state that they did not intentionally mislead anyone and they felt the fee was unnecessary.

The payment of the fine is not seen as admission of guilt. Payments aren't even legally enforced, but if not paid, can result in legal action against the company. Many companies choose to pay the fine to avoid court and possible higher penalties.

On the ASIC’s side, it’s more financially feasible to issue the infringement notice than pursue legal action, since most companies end up complying with the notice and remedying their offenses.

 In a world where ridiculous advertising claims reign supreme, it has to be asked, was Media Super being overly misleading? Or were they simply advertising their product? It all depends on if the omission of facts was intentional.

Misleading advertisements are a huge deal, and with ASIC cracking down, it’s important for companies to balance making your product appealing with reality.

Insurance and investment information especially should be open and honest, as misleading people with their finances can lose you any credibility your business has obtained.

Whether you run a company website or are looking for insurance or investment information, it’s always best for companies to have disclaimers specifically explaining what the knowledge should be used for.
For example, clearly states that the estimates
are not to be seen as financial advice, and they do not take into account your personal financial situation.

In this day and age, with information being readily available, companies must be careful what they say. It’s understandable to offer insights online and want to be seen as a leader in industry knowledge, but you must protect yourself from being held liable if people were to take your word as advice and not like the results. All product disclosures, advertorial materials, and any content released by a company needs to have specific disclosures about the intent of the information.

- Written by Amanda Jensen


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