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17 May 1985

News release

Standard of financial advertising

The Chairman of the Securities Commission, Mr Colin I. Patterson, announced that representatives of the Commission and the Committee of Advertising Practice had met today to consider the standard of financial advertising since the new rules in Part II of the Securities Act 1978 had come into force in September 1983.

Mr Patterson observed that in 1983 the Commission and the Committee had agreed that to the greatest extent possible financial advertisers would regulate themselves in voluntary association with the Committee of Advertising Practice in accordance with the provisions of a Code of Financial Advertising. This Code was prepared by the Committee with the help of the Commission.

The effects of the change in the law relating to financial advertising were immediately apparent in the view of both the Commission and the Committee. Financial advertising is more interesting and informative. The public is better informed about the investment opportunities available.

Despite this general improvement, however, there have been very many cases of illegal advertising in the recent past, particularly by issuers of participatory securities, for example, in the thoroughbred, standardbred and fitch farming industries. The Commission has prohibited several of these advertisements under the authority of the Securities Act.

The Committee of Advertising Practice have been asked to remind their members forcefully of their obligations to comply with the law and the Code of Financial Advertising. Neither the Commission nor the Committee wish to abandon the policy of voluntary compliance under the authority of the Committee of Advertising Practice. However, Mr Patterson concluded, it is the view of the Commission and the Committee that prosecutions should be made in appropriate cases to ensure that the law is observed and that the views of the Committee of Advertising Practice are respected.