ASIC was concerned that the
use of words like ‘certainty’ and ‘secure’ materially overstated the
safety of investing in debentures to vulnerable investors.
ASIC has accepted an Enforceable Undertaking from
Fincorp in relation to advertisements that appeared in major
metropolitan newspapers and played on radio stations across the
country. The advertisements invited consumers to invest with Fincorp
and used taglines such as:
- ‘Invest with certainty!’;
- ‘Prudent investors require certainty’;
- ‘They also want a strong measure of security so they can sleep soundly at night’;
- ‘The rate you choose is secured for the term of your Fincorp Investment’; and
- ‘First ranking investors can enjoy peace of mind through a First Ranking Charge’.
ASIC was particularly concerned with these
statements, and the overall message of the advertisements, in the
absence of any qualifications or disclaimer. ASIC was concerned that
the advertisements were misleading given the degree to which they
promoted the security of the investment and certainty of return.
‘A debenture is simply not a bank deposit and any
suggestion in that direction is seriously misleading. There is nothing
magic in a debenture and nothing that ensures that a debenture is a
secure investment, it depends on a number of factors such as how the
investors’ money is used and the quality of the assets over which
security is given’, ASIC deputy chair Mr Cooper said.
