The industry funds have been running their ‘compare the pair’ advertising campaign for well over half a decade and it is only now that the Australian Securities and Investments Commission (ASIC) is scrutinising whether the ads might be misleading.
If, as ASIC commissioner Greg Tanzer has indicated, the regulator reviews and then acts on the latest Industry Super Australia “compare the pair” television advertisements, then it will be effectively overturning more than half a decade of precedent.
Why? Because advertisements very similar to those being run by Industry Super Australia (ISA) in support of its industry superannuation fund constituents have been a part of the superannuation landscape for most of the past eight years.
In fact, when the original “compare the pair” advertising was referred to the Australian Prudential Regulation Authority (APRA) on the basis that it might contravene the sole purpose test within the Superannuation Industry (Supervision) Act, it ultimately got waved through by the regulator as not being in breach.
However the current ASIC scrutiny of the advertising has nothing to do with the sole purpose test. Rather, the corporate regulator is reviewing the advertising to determine whether it can be deemed to be misleading to consumers who view the television segments.
If ASIC makes that determination, it will likely be based upon an assessment that the advertisements do not actually compare individual industry funds with individual retail funds but, rather, take an average of particular industry funds and compare that average to retail funds.
Does that represent a technical breach? Possibly. Would consumers be misled by the advertising? No more nor less than has been the case over the duration of the industry funds’ “compare the pair” advertising campaign.
But it is worth noting that ASIC has developed some recent form with respect to scrutinising some of the advertising claims made by industry funds and then finding them to be misleading, with the most recent stand-out case being with respect to Media Super.
ASIC announced in January that Media Super had paid a $10,200 penalty after producing potentially misleading advertising relating to September 2012, when the industry fund published some advertising as a factsheet titled ‘Self-managed super? You be the judge’.
The ad, which appeared on Media Super’s website and was sent out to all fund members, compared the costs and benefits of self-managed super funds (SMSFs) with the Media Super fund – something which prompted ASIC to express concern that the factsheet inaccurately represented the costs and benefits of Media Super versus SMSFs.
In publicising the regulator’s actions, Tanzer said: “ASIC is serious about making sure investors can be confident and informed and that means cracking down on misleading or inaccurate advertising”.
So ASIC has clearly acted before to penalise an industry fund for advertising it deemed to be misleading, but there will be many in the superannuation industry who will wonder why it has taken well over half a decade for the industry funds’ “compare the pair” advertising to be placed under the regulatory microscope in such a context. Some might even wonder whether there is any connection with last September’s change of Government in Canberra and the current Senate Committee review of ASIC’s activities?
There is plenty of evidence that ASIC’s crackdown on potentially misleading financial services advertising has impacted more than just industry funds, but it is worth noting how long it has taken for the industry funds’ “compare the pair” campaign to be questioned.