Retirees at risk of being duped by false and misleading super fund advertising concern the financial services regulator ASIC.

ASIC surveilled super marketing and promotions and detected “inadequate warnings or disclaimers” across 18 managed funds holding a collective $1.4 billion in assets.

Of particular concern is ASIC’s finding that funds are “downplaying the risks associated with investing” and must do better at representing their investment performance in their marketing materials.

The regulator’s surveillance found some fund managers must do more to ensure the investment performance representations in their fund’s marketing materials are appropriate.

ASIC Deputy Chairwoman Karen Chester warned funds against adopting “fair weather” marketing tactics, which seek to highlight good conditions over bad.

“Investors are entitled to accurate information about the products they may decide to invest in,” Ms Chester said.

The ongoing surveillance follows ASIC’s crackdown in 2020 to enforce “true to label” marketing, which forced 13 investment firms to modify their offerings or associated marketing materials.

The funds have voluntarily amended, or arranged for the investment manager to amend, their marketing materials and/or practices.

No findings have been made that the funds are breaching the law.

Ms Chester said “unsophisticated” retiree investors were among its primary concerns. These investors could make important investment decisions based on marketing that does not accurately represent fund performance.

‘Investors are entitled to accurate information about the products they may decide to invest in. Responsible entities, trustees and investment managers must ensure they don’t stray into ‘fair weather’ marketing,’ she said.

ASIC’s concerns include:

• inadequate warnings or disclaimers about past or future performance
• comparing the product to lower-risk products, indices or benchmarks, and
• the downplaying of other risks when promoting fund benefits.

‘In conveying our concerns to these responsible entities and trustees, we have secured timely and voluntary amendments to the funds’ marketing materials,’ Ms Chester said.

The list of funds required to amend their marketing material can be found here.

ASIC says these funds represent a broad cross-section of investment strategies and asset classes. They include nine registered and nine unregistered funds, with approximately $1.4 billion in assets under management.

ASIC has told funds they must comply with these principles and regulatory guidelines:

• Marketing must give balanced messages about returns, features, benefits and significant risks.
• Risk disclosure needs to be clear and prominent.
• The safety, reliability or security of an investment should not be overstated.
• Comparisons with other products or benchmarks must be appropriate and reasonable.
• Any reliance on past performance must explain that it is not indicative of future performance.
• Care must be taken with the use of images, graphs and tables to ensure they are not confusing.

Perpetual Trust Services, a subsidiary of ASX-listed wealth giant Perpetual, was one entity named due to concerning advertisements for the Firstmac High Livez fund. Firstmac High Livez fund is a third-party managed fund to which Perpetual Trust Services acts as the trustee.

ASIC said Perpetual had instructed the fund’s manager to add additional warnings and update its website after the surveillance found it compared its performance to the official Reserve Bank cash rate.

A Perpetual spokesman told the Australian Financial Review: “Perpetual Corporate Trust acts as Responsible Entity for more than 100 registered schemes and 50 investment managers globally. We continue to work closely with the appointed investment managers to ensure schemes meet their regulatory and compliance obligations.”

For further reading: ASIC and AFR