ASIC concerned over misleading use of past performance information in ads

ASIC has cautioned investment funds against the misleading use of past performance information in advertising and promotional material. The warning follows concerns that an advertisement for an investment product offered by BT Financial Group (BT) included past performance information which was potentially misleading. The advertisement’s headline asked the rhetorical question: “Past performance isn’t a reliable indicator of future performance, is it?”, followed by past performance information showing strong returns. In ASIC’s view, the advertisement was misleading because it encouraged consumers to believe that the past performance of the product was a reliable indicator of future performance. “Past performance is not a reliable indicator of future performance. An undue emphasis on past returns can lead to consumers having unrealistic expectations and making poor investment decisions,” ASIC’s executive director of consumer protection, Greg Tanzer said. BT has agreed to stop its existing advertising and refrain from using similar wording in future advertisements. BT is now also implementing measures to improve compliance in its advertising and other communications.