On 18 December 2014 the FMA issued a warning about potentially misleading advertising by New Zealand businesses that help to transfer UK pensions to New Zealand. The warning highlights the importance for all businesses, including providers of financial services, of ensuring that their advertising and marketing activities comply with the “fair dealing” requirements in the FMC Act (for financial markets participants) and the Fair Trading Act (for other businesses). These provide that, in broad terms, businesses must not make misleading or deceptive statements, or make unsubstantiated representations, in connection with their products and services.
A key concern noted in the FMA warning is advertising creating a sense of alarm about accessibility to pension entitlements and tax treatment, without balancing that with information on potential disadvantages of transfers. But what is misleading or deceptive is always very fact specific. An August 2014 Court of Appeal decision (Godfrey Hirst NZ Ltd v Cavalier Bremworth Ltd) was likely a key consideration for the FMA when it made the warning. That decision provides very useful guidance on the law in this area and its application. A key matter that decision confirmed, and that is likely relevant to the warning, is that in some circumstances a “dominant message” in marketing material can be misleading even if that message is later qualified.
The FMA’s 18 December 2014 warning and a September 2014 warning show that the FMA is monitoring financial markets participants’ compliance with the fair dealing requirements. This follows from the FMA’s expanded ability since 1 April 2014 to regulate misleading and deceptive conduct in relation to the provision of all financial products and services. Since then the FMA has stronger powers to take action, including the ability to make direction orders and stop orders.
The FMA has produced some limited information and guidance in relation to fair dealing, see:
Cygnus Law can contribute to the provision of compliant advertising and marketing, including by reviewing your marketing material to help to identify potential concerns and by proposing compliant solutions. Cygnus law can provide information to you on the law in this area and on how it applies in practice, and can contribute to the preparation of relevant internal guidelines and procedures.
Please note that this blog entry is a broad summary only, is not legal advice and should not be acted or relied upon without seeking legal advice.