17 Sep Misleading and Deceiving the Financial Services Regulator
Australia tightly regulates misleading and deceptive conduct, and false or misleading representations. The Australian Securities and Investments Commission (ASIC) is the regulator responsible for regulating financial services. ASIC’s powers to enforce honest and transparent financial markets are provided by the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).
Misleading and Deceptive Conduct
Section 12DA of the ASIC Act prohibits conduct that is misleading or deceptive in relation to financial services.
This provision analogous to section 18 of the Australian Consumer Law. However, the Australian Consumer Law does not cover financial services. As such, the inclusion of section 12DA in the ASIC Act is necessary.
Please see more on misleading and deceptive conduct in consumer and employment matters here.
False or Misleading Representations
Section 12DB of the ASIC Act prohibits persons from making false or misleading representations about financial services in specified circumstances. The provision exhaustively lists the relevant circumstances, including matters such as the standard, quality, or value of a financial service.
Please see more on false and deceptive representations in consumer matters here.
Misleading in relation to Financial Services
Section 12DF of the ASIC Act prohibits conduct that is liable to mislead the public as to the nature, the characteristic, the suitability for their purpose or the quantity of financial services.
This prohibition appears similar to sections 12DA and 12DB of the ASIC Act. However, we can identify the key differences between these provisions as follows:
1. section 12DA of the Act applies broadly to all misleading and deceptive conduct;
2. section 12DB of the ASIC Act prohibits specific representation that are either false or misleading; and
3. section 12DF of the ASIC Act prohibits all conduct liable to mislead the public about specific features of a financial service.
Case Example
The decision Latitude Finance Australia v Australian Securities and Investments Commission [2025] FCAFC 124 considered each of the above provisions of the ASIC Act.
This judgment concerned a promotional campaign goods available for purchase with “60 months interest free” and “no deposit”. ASIC alleged the campaign contravened each of the above provisions as the campaign failed to disclose key terms. These terms included a requirement to open a credit card account which included substantial and ongoing fees.
The Full Court of the Federal Court of Australia found in ASIC’s favour. The Court agreed the campaign did contravene each of the above provisions of the ASIC Act as:
- The campaign was misleading to ordinary and reasonable consumers. It omitted material terms relating to opening separate account and associated fees.
- The ancillary statements disclosing the fees and conditions was not clear enough to qualify the main campaign message.
- An ordinary and reasonable consumer would not expect additional ongoing fees or financial commitments from viewing the campaign.
Conclusion
Misleading or deceptive conduct and representations in the financial services industry can attract significant scrutiny from ASIC and the courts. A Court will impose liability if it finds that the overall impression misleads an ordinary and reasonable consumer, even when some information is disclosed.
Financial services providers should therefore adopt transparent and comprehensive communication strategies, ensuring that advertisements, product terms and client interactions withstand regulatory and judicial review. Ultimately, honest and accurate disclosure is not only a legal obligation but also central to maintaining trust and integrity in Australia’s financial markets
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