ASIC penalises property developer over ads
Businesses associated with Perth-based property developer, the Nicheliving Group, have paid $40,800 in penalties following a five-month advertising campaign on Facebook, Youtube and a series of TV channels, saying consumers could obtain an investment property from "just $59 per week".
The Australian Securities and Investments Commission (ASIC) revealed it issued infringement notices to the Australian Property Alliance Pty Ltd, and imposed new licence conditions on the Australian Credit Licence of Wealth WA Pty Ltd, which provided financial services in the course of the Nicheliving Group's primary business.
"Four infringement notices were issued to APA, resulting in payment of $40,800, for misleading advertisements published on various websites administered by APA, the Nicheliving Facebook page, YouTube, as well as on television channels 1, 9, 10, 11 and GEM during the period 14 May 2014 to 16 October 2014," ASIC revealed.
"The advertisements represented that consumers could obtain an investment property from ‘just $59 per week'. ASIC was concerned that the advertisements were misleading because they did not disclose the detailed assumptions and qualifications which underpinned a negative gearing investment strategy, requiring the consumer to enter into a mortgage to finance the purchase of the property and to pay an upfront amount of $35,000."
The regulator reported that it was concerned by the accuracy of other historical advertising published by WWA which included headline claims to the effect that its financial services could assist consumers to:
- pay off their mortgages in eight years instead of 30;
- legally reduce their tax to nil; and
- increase their net worth by $100,000 by investing $59 per week.
In response to ASIC's concerns, APA and WWA have agreed to:
- engage an independent compliance consultant to review their respective advertising policies and procedures; and
- adopt training procedures to ensure their staff are informed of legal requirements in relation to marketing undertaken in connection with financial products or financial services.
In a statement provided by Nicheliving, a spokesperson said, "Nicheliving acknowledges the important role the regulators have to play with respect to ensuring compliance with advertising standards and Nicheliving endeavours at all times to comply with those standards.
"The concerns expressed by ASIC related to the adequacy of the disclosure in the advertising of the detailed assumptions and qualifications which made it possible to invest with Nicheliving from just $59 per week utilising a negative gearing investment strategy. ASIC did not find that it was not possible to invest with Nicheliving from just $59 per week if the strategy was adopted. As soon as ASIC’s concerns were raised, the advertising in question was removed.
"The payment of an infringement notice is not an admission by Nicheliving of any contravention of the relevant legislation. Nicheliving is and wishes to be a good corporate citizen. We have no intention to mislead anyone and wish only to act in accordance with the relevant statutory framework."
AUTHOR
Nicholas O'Donoghue
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