CBA and HSBC change “potentially misleading” ads
The Commonwealth Bank (CBA) and HSBC Bank have changed their advertising for certain products after the Australian Securities and Investments Commission (ASIC) deemed them potentially misleading to retail investors.
CBA’s flyer compared investing $100,000 directly in listed shares with using the bank’s Protected Loan product to buy the same shares, but the comparison and accompanying claims about the benefits of the strategy failed to subtract the interest costs of the loan, which ASIC said might not have been clear to consumers.
Furthermore, the flyers stated investors could walk away with no loss at maturity if the share prices fell. However, the costs of the loan and protection had not been considered, with ASIC saying the warnings about this were not prominent enough.
HSBC, on the other hand, claimed certain structured products offered by the bank were low-risk and comparable to relatively safe investments such as term deposits.
According to ASIC, HSBC claimed its structured products were suitable for “traditional deposit investors looking for a way to enhance their returns through exposure to financial markets, but who are unwilling to put their capital at risk should the market not perform as expected”.
However, the regulator deemed this statement inappropriate and potentially misleading, due to the risk of capital loss pertaining to certain HSBC structured products being promoted.
ASIC Deputy Chairman Peter Kell said ads which created unrealistic expectations about a product’s features or risks were unacceptable.
“We will continue to monitor industry practice in the description and labelling of structured products, especially where there are claims of capital protection”, Kell said.
“Ads must not be misleading as to a product’s nature or features, and appropriately outline the risks to investors.”
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