ASIC Releases Its Advertising Guide
Better Disclosure For Unlisted And Unrated Debentures: ASIC Releases Its Advertising Guide
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The Australian Securities and Investments Commission (ASIC) has made further progress in implementing its ‘Three Point Plan’ for unlisted and unrated debentures today by releasing Regulatory Guide 156: Debenture advertising.
ASIC Chairman, Mr Tony D’Aloisio said that the release of the finalised advertising guide was another important step in implementing the Three Point Plan for this market and toward improving disclosure for investors.
‘Advertising of these products has played an important role in attracting retail investment to this sector. We will now work with debenture issuers and publishers to assist them to comply with the new guide’, Mr D’Aloisio said.
The Chairman thanked those who put forward valuable comments and suggestions as part of the consultation process informing the development of the guide.
ASIC will expect advertising by issuers to comply with the guide from late January 2008 onwards. Regulatory Guide 156: Debenture advertising Debenture issuers, industry and consumer groups together made 20 submissions in response to ASIC’s Consultation Paper 94 and draft regulatory guide released on 31 October 2007. In the final regulatory guide, ASIC has decided to proceed with most of the proposals in its draft guide, but has provided further explanation and guidance around some of the issues in response to the submissions it has received. Accompanying the regulatory guide is an outline of submissions received, together with reasons why ASIC may not have followed certain suggestions.
While the primary responsibility for advertising material rests with the organisation placing the advertisement, the publisher or other media conduit may also have some responsibility for its content. Accordingly, ASIC has provided guidance on the role of publishers and the media in promoting debenture products.
A dedicated ASIC team will continue to work with issuers and publishers to assist them in complying with the principles set out in the guide.
The guide provides new advertising standards for all issuers of debentures that are offered to retail investors (including those that are listed and rated). It applies to advertising across all media.
ASIC’s new approach is to provide the following principles-based standards in relation to the advertising of debentures for issuers of debentures:
1. All advertisements for debentures offered to retail investors should include a prominent statement to the effect that investors risk losing some or all of their principal investment.
2. Advertisements for debentures should only quote an interest rate if it is accompanied by prominent disclosure of either the current credit rating for the debenture and what that means or where to find this information or, where the debenture does not have a rating, what this means.
3. Advertisements should state that the debenture is not a bank deposit. They should also avoid the use of terms such as ‘secure’, ‘secured’ and ‘guaranteed’ and avoid the term ‘no fees’, as these statements may convey a misleading impression as to the risk profile of the debenture.
4. Advertisements for debentures should not state or imply that the investment is suitable for a particular class of investor.
5. Statements in advertisements for debentures should be consistent with the corresponding disclosures in the prospectus.
6. Statements made in response to inquiries are subject to the same regulation regarding misleading and deceptive conduct as the advertisements.
The guide also makes it clear that we expect publishers to have systems and controls to detect and refuse advertisements for debentures that do not comply with these advertising standards.
A copy of Regulatory Guide 156: Debenture advertising is available from the ASIC website at www.asic.gov.au.