Debenture advertising: ASIC Regulatory Guide 156

ASIC has released  Regulatory Guide 156: Debenture advertising (pdf).

ASIC will expect advertising by debenture issuers to comply with the guide from late January 2008 onwards.

The Guide sets out the following principles-based standards in relation to the advertising of debentures for issuers of debentures:

1. All advertisements for debentures offered to retail investors should include a prominent statement to the effect that investors risk losing some or all of their principal investment.

2. Advertisements for debentures should only quote an interest rate if it is accompanied by prominent disclosure of either the current credit rating for the debenture and what that means or where to find this information or, where the debenture does not have a rating, what this means.

3. Advertisements should state that the debenture is not a bank deposit. They should also avoid the use of terms such as ‘secure’, ‘secured’ and ‘guaranteed’ and avoid the term ‘no fees’, as these statements may convey a misleading impression as to the risk profile of the debenture.

4. Advertisements for debentures should not state or imply that the investment is suitable for a particular class of investor.

5. Statements in advertisements for debentures should be consistent with the corresponding disclosures in the prospectus.

6. Statements made in response to inquiries are subject to the same regulation regarding misleading and deceptive conduct as the advertisements.

The guide also makes it clear that ASIC expects publishers to have systems and controls to detect and refuse advertisements for debentures that do not comply with these advertising standards.