Both general and life insurers have been swept up in the Australian Securities and Investments Commission’s (ASIC) new paper on financial services advertising.

ASIC has produced a draft “Good Practices Guidance” for companies advertising financial services products on all types of media, including the internet.

The thrust of the consultation paper is aimed at wealth management companies and lays down guidelines on how products and services should be advertised.

But insurers are included in the guidelines, which will define standards on use of items such as fees, comparisons, past performance and certain terms and phrases.

ASIC is proposing that “advertisements for financial producers should clearly explain the nature of the advertised products in terms to be understood by the audience likely to see them”.

“Advertisements should be complete so that consumers can assess the merits of the financial product or advice service being advertised.”

ASIC cites the example of an insurer advertising its product as having the lowest available premium.

The paper says this could be allowed, but only for a two-week period due to the competiveness of the market.

“Advertisements may create a lasting impression in consumers’ minds and, in this case, the impression would quickly become incorrect,” ASIC said in the paper.

The regulator undertook a review of general insurance products and found some online advertising for offers and discounts were unqualified.

“Our concerns were that where a banner advertisement on a webpage includes information about the potential returns available from a product, this should be balanced with information about the risks in the same banner,” ASIC said.

“Including a reference to another page on the website where the consumer can find out information about the risks is unlikely to correct a misleading impression.”

Advertisements offering insurance spread over “12 easy monthly payments” has also come under ASIC’s scrutiny, as the actual cost for the year could be misleading.

It is proposing that where costs are included in an advertisement it “should give a realistic impression of the overall level of fees and costs a consumer is likely to pay”.

The media hasn’t escaped scrutiny either, as ASIC is asking the industry whether publishers should be included in the guidelines.

“We expect publishers and the media who deal with advertisements for financial products and services to be aware that advertisements need to be accurate and balanced and help consumers make decisions that are appropriate for them,” the guidelines said.

“They should refuse, or cease publishing, advertisements that do not meet these criteria.”

ASIC accepts the primary responsibility for the content of advertisements rests with the company, but it also believes “a media outlet may also have some responsibility for its content”.

The Insurance Council of Australia has formed a committee to examine the paper and told insuranceNEWS.com.au it couldn’t comment for at least two weeks.

Submissions on the consultation paper need to be sent to ASIC by October 25.