Online obligations

They concede the legislation has added to their workload, but compliance is now a part of their general workflow. Brokers know how to be compliant in their dealings with consumers and generally understand the paperwork and processes associated with NCCP.

The same applies, largely, to new-to-industry brokers. Those who entered the industry after NCCP came into effect have no point of comparison and so compliance is part and parcel of their job description.

Less clear, however, is how the legislation applies to online activities.

Can a broker be non-compliant when posting something on their Facebook page? Is there a difference between what a broker can say in a face-to-face meeting with a client and what they can advertise on their website?

According to Jon Denovan, partner at Gadens Lawyers, this is an area that the Australian Securities and Investments Commission (ASIC) is increasingly scrutinising.

“Both the ACCC [the Australian Competition and Consumer Commission] and ASIC regulate this, but ASIC is the one looking at the websites,” he says. “They’re trawling through people’s websites and writing to brokers saying, ‘You’d better fix it up’.”

So, what is ASIC looking for and what can you do to avoid getting into trouble in this area?

Deceptive and misleading conduct

Much of what you can and can’t say on your business’ website is governed by the Consumer and Competition Act 2010, Mr Denovan explains.

The legislation prohibits a person, in trade or commerce, from engaging in conduct which is misleading or deceptive, or that is likely to mislead or deceive.

Even though some brokers have been confused by what constitutes crossing the ‘advice’ line online, according to Mr Denovan they should instead be focusing on the advertising and promotional side of things.

“You normally can’t get into trouble by posting articles and writing blogs,” he says. “After all, the internet is a discussion forum. It’s when you’re advertising products that you’ve got to be careful not to make false claims.

“‘Cheapest’, ‘best’ and ‘instant decisions’ – all those sorts of words are red rags to the bull. And of course, if you have an interest rate, you must have a comparison rate.

“I think if you deal with those four things, that’s the main check you need for your website. Watch out for the words ‘best’, ‘cheapest’ and ‘instant’ and make sure you have a comparison rate for interest rates.”

Mr Denovan says brokers should also take care with their ‘headline’ claims – the hook they use to capture people’s attention online and draw them in.

Most people think that if they specify ‘terms and conditions apply’, and have a small footnote on their website, then they will avoid any recriminations.

The disclaimer, however, may not be enough.

“Consumers tend to only read the headline claim, the bold statement,” says Mr Denovan. “If the headline claim has to be qualified, you have to be careful. If you say ‘interest rates from four per cent’, but in order to get an interest rate of four per cent you have to be living on Mars, then that’s misleading – even if you say that ‘terms and conditions apply’.

“It’s fine to have terms and conditions, but the main thrust must not be misleading. If not everyone is entitled to the loan you’ve advertised, but there is a reasonable class of people who are, then that’s fine. But if no-one qualifies, then that’s hopeless and it’s misleading and deceptive.”

An ASIC spokesperson confirms this is an area the regulator is increasingly monitoring.

“Generally, one of the most common compliance issues that ASIC comes across on websites is in relation to advertising,” the spokesperson says.

“One area that may cause compliance problems is where a website advertises rates and products without appropriate warnings and disclaimers. Further, some internet sites provide lengthy disclaimers that scroll quickly.

Any information provided on a website should be comprehensible to an average consumer on the first viewing of the ad.”

ASIC recognises that a headline claim cannot always encompass all the information about a product relevant to a consumer’s decision. However, according to the regulator, the more qualifications required to balance a claim, the more prominent these qualifications need to be.

If a headline claim is complicated by a range of conditions, qualifications and variables, these cannot be hidden away.

Staying compliant online

The best way to remain compliant in your online activities is to stay as up to date as possible, according to ASIC.

“Brokers work in a dynamic industry. Accordingly, brokers need to ensure they are aware of legislative amendments and industry developments,” the ASIC spokesperson says.

“They can do this by keeping an eye on the ASIC website, subscribing to trade magazines, obtaining information from the Mortgage & Finance Association of Australia and/or their aggregator and, where required, comply with their continuing professional development requirements.”

This will ensure any regulatory changes are reflected in an up-to-date website that does not provide false or misleading information.

“Keeping a website up to date is particularly important where reference is made to loans available at certain rates in an environment when rates may fluctuate,” the ASIC spokesperson says. “If a website refers to specific rates then these must be accurate and up to date.”

Tony Bice, director of Finance Made Easy, relies on his website to drive new leads through the door and says that the best way to ensure you’re being compliant online is to work with your aggregator.

Aggregators can guide you as to what you can and can’t put on your website, he says. In addition, most brokers use website templates to ensure they tick all the boxes.

“Once upon a time, web developers used to charge you a lot of money and it was quite a confusing area,” he says. “These days, you just pick the template you like, drop your logo in, put the branded or the standard compliance message that you need – which is guided by your aggregator – and bingo, you’ve got a website.

“The best option for brokers who are unsure is to get a website template with compliance built into it.”

According to ASIC, if a broker has any concerns about their website, they should seek legal advice, although Gadens’ Mr Denovan says that in most cases this won’t be necessary.

“You can have your website reviewed by a lawyer, but most people aren’t going to do that,” he says. “Have a friend or colleague read over it first with those tests in mind – ‘fast’, ‘biggest’, ‘quickest’, ‘instant’ and misleading bold comments.

“A sensible person can generally read your website and tell you whether they think you’re mucking about.”

Brokers need to display their ACL on their website and ensure that any testimonials come from real people.

“If you have ‘The nicest broker I have ever met’ in inverted commas, it has to be a real person who said it. You can’t have rubbish recommendations,” says Mr Denovan. “You can claim that you’re a nice broker, but you can’t pretend that other people are saying it – that’s another favourite of ASIC.”

Brokers need to consider whether they’re providing a balanced message online, ASIC advises.

“Our overall policy objective is that advertisements should give a ‘balanced message’ about the product or service,” the spokesperson says. “Whether through word-of-mouth or online, brokers should consider the characteristics of the actual audience that is likely to view or hear the material.

“This does not mean that an advertisement should include all the information about a product or service, but the information that it does provide should not create an unrealistic expectation for consumers.”

Social media and online interactions

So, where does social media fit into all this? Should brokers think of social media as an advertisement or as a conversation with clients?

Mr Denovan says brokers should apply the same rules to social media as they do to their websites and be particularly careful when promoting their services. Social media can be particularly fraught with danger for brokers due to space restrictions and word limits, according to ASIC.

“Brokers should carefully consider the appropriateness of some new media channels if content limitations mean there is insufficient space to provide balanced information,” the ASIC spokesperson says.

“Social media, networking and micro-blogging services such as Twitter allow promoters to deliver short advertisements directly to consumers. However, as with other forms of advertising, promoters should consider the overall impression created by the advertisement when viewed for the first time.

“Appropriate warnings and disclaimers need to be prominent – regardless of what platform you are operating on.”
The only exceptions to these rules are personalised quotes and calculations.

“If a person goes onto your website and puts in their own particulars and produces a personalised quote, then that’s not an advertisement. That’s a communication to that specific person because it’s reacting to the data that person has put in,” says Mr Denovan.

“You still can’t be misleading, but in that instance, because it’s not advertising, you don’t have to have a comparison rate.

“I think comparison rates worry brokers and lenders a lot.”

With more and more brokers ramping up their online presence, activity and interactions – and with ASIC flagging this as an area of concern – even brokers who have a handle on compliance issues might want to take a closer look at the requirements and review their online platforms.