Australian Financial Services Licence ("AFSL") holders that are in the business of comparing financial products are now at the centre of ASIC's latest enforcement action.
ASIC recently announced that it was suing insurance comparison provider, Choosi Pty Ltd ("Choosi"). ASIC alleges that Choosi misled customers through its comparison services in contravention of sections 12DB and 12DF of the ASIC Act 2001. It is alleged that Choosi made claims that it compared products from a range of funeral and life insurers, when in fact, it's comparisons only included policies issued by a single insurer which was associated with Choosi (Greenstone Financial Services Pty Ltd).
ASIC's enforcement action against Choosi shows the regulator's commitment to consumer-focused actions and, to stopping licensees from taking advantage of consumers.
While this is an ongoing case, AFSL holders running comparison websites or offering comparison services through other mediums such as social media, should consider implementing the following:
- comparison websites must ensure they offer a genuine comparison as opposed to using their comparison services to operate a sales channel or distribution platform for particular product issuers;
- conduct a review of marketing material and consider whether the
material includes false or misleading representations about:
- the price and a consumer's need for the service;
- that the comparison services are of a particular standard, quality, value or grade;
- testimony from a person who has received services from the licensee; and
- ensure they do not engage in conduct that is liable to mislead the public about the nature, characteristics, suitability of purpose, or the quantity of any financial or credit products for the consumer;
- ensure that products being compared have "sufficiently similar features to make the comparison relevant and not misleading" (RG 234.72).
Comparison Websites
False and misleading representations
Licensees operating comparison websites should check material for false or misleading representations about:
Sophie Grace provides marketing checklists which you can use to review your comparison websites and promotional materials.
Further Reading
- ASIC sues Choosi for allegedly misleading customers through its insurance comparison service
- ASIC Regulatory Guide 234 Advertising financial products and services (including credit): Good practice guidance
- AFSL Marketing Checklist Template (Generic)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
