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When you offer services or advice around financial matters, such as financial planning or investment, you offer a specialised service based on your experience as a professional. When your customers see your advertisements and promotional material, they should be able to rely on the truth of the assertions you make. The sensitivity of this sector and the nature of its content means the law imposes strict requirements on how you can advertise your financial services to your customers. You must not mislead or actively try to confuse your customers, or else you risk legal penalties. For some guidance, this article will go through three tips for financial services businesses when advertising online.

1. Ensure You Have Proper Authorisation

Financial service providers include a variety of professions, including:

  • credit providers;
  • fund managers;
  • insurers;
  • financial advisors;
  • businesses that sell financial products;
  • credit unions; 
  • foreign currency exchange agencies; and
  • investment portfolio managers.

In most cases, if you legally want to provide services to clients, you need to register on the Financial Service Providers Register (FSPR). Some financial service providers also need a licence to operate, such as financial advisors. You need to register if you:

  • provide services as an Anti-Money Laundering (AML) entity;
  • offer licensed financial services;
  • act as a financial advice or consumer credit provider; or
  • provide financial services above a certain threshold to New Zealand clients.

You must observe this law, as this will affect your advertising opportunities online. Google manages many advertising platforms that your business may use online, and they have strict requirements for anyone in the financial services industry using their advertising software. One of those requirements is that you comply with local law and regulations. Therefore, you need to ensure you operate within the law’s parameters when you provide and advertise your financial services. This is both to avoid legal penalties and to have access to efficient advertising services online.

For example, you cannot provide financial services or sell financial products if you have committed a dishonest crime or are an undischarged bankrupt. If you do, you are doing so against the law. Advertising companies will observe this and not advertise your business online.

2. Deal Fairly

Under the Fair Trading Act, any business in New Zealand can face legal consequences for misleading or deceiving its customers. The Financial Markets Conduct Act (FMC Act) has a similar standard that you need to follow to deal with your customers fairly. It applies to any kind of advertising in any medium, whether online or in a physical newspaper. The FMC Act prohibits:

  • misleading or deceptive conduct;
  • false or unsubstantiated representations; and
  • offers of financial products, such as debt securities, during unsolicited meetings.

You need to ensure your advertisements are truthful and transparent. This requirement applies to anyone that provides a financial service, whether you register or not. For instance, you must take care not to mislead your customers and should back up the claims you make with evidence to preserve market integrity. In particular, you should:

  • take care when comparing different products;
  • accurately balance risk and reward;
  • be careful with the industry phrasing and jargon you use;
  • only base forecasts on reasonable and justifiable assumptions;
  • not overemphasise performance over other important information;
  • tell your customers about fees and costs;
  • not make any claims about particular endorsements or approvals; and
  • clearly differentiate between your advertising and other material.

3. Clear Up Customer Confusion Wherever Possible

There is an additional standard for financial services businesses that covers more advertising behaviour. The Financial Market Authority (FMA) can issue stop orders to any financial service provider that advertises or markets in a way that is likely to confuse consumers or investors when they make their financial decisions. With a stop order, the FMA can prevent you from offering certain financial services or products. 

‘Likely to confuse’ is a higher standard for your advertisements, which means you need to be careful about how you market your financial services. If you confuse your customers about what kinds of services you provide or the validity of certain products, then you could face a stop order. You would not be able to advertise, and you could lose your ability to provide services altogether. 

Therefore, you need to focus on ensuring your advertisements are clearly understandable. This entails:

  • ensuring the overall impression of your advertisements is truthful;
  • making sure any warnings or disclaimers should be prominent;
  • not cherry-picking favourable information;
  • substantiating your claims with evidence;
  • not relying on anecdotes or assumptions; and
  • taking extra care when advertising complex services that the average consumer may not understand.

Key Takeaways

When operating online, you will likely include eye-catching slogans and promises in your advertisements to draw customers. However, you need to take care that your marketing strategy does not confuse customers about the nature of the service you provide. Otherwise, you run the risk of both legal action and losing your ability to offer services. If you would like more information or help with your financial service business’ online advertising, contact LegalVision’s regulatory and compliance lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What is a financial services provider?

There are many different kinds of financial service providers in the financial services industry. This includes anyone that provides a financial advice service, as well as investment managers and anyone that provides financial products.

Can I advertise my financial services on Facebook?

You can advertise your financial services on Facebook as long as you comply with both their rules and New Zealand’s legal requirements around advertising.

How can I advertise my financial services?

When you advertise your financial services, you need to take care not to mislead or confuse your customers. Ensure the overall impression of your advertisements are transparent and do not make claims you cannot back up.

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