High advertised returns on investments


High advertised returns on investments
Every now and again, consumers are bombarded by advertisements promoting financial products and services portraying "guaranteeing" returns of up to 5 or 6% whilst stating that capital is also guaranteed if held over the whole period of the product (such as five or seven years).
However, the MFSA notes that some of the adverts highlight attractive percentage returns that appear to be annualised returns, when in fact they are not. It has been noticed, for example, that some returns being advertised are only guaranteed for the first year of the investment, with no indication of returns for the second and subsequent years. Other adverts, for example, explain that in order to guarantee the advertised return, the product issuer may have to redeem part of the capital, which in turn would result in an erosion of the invested capital.
Financial intermediaries are expected to promote their products in the best possible light. However, the corresponding advertising material should at all times be in line with the rules laid down by the MFSA. The Authority will continue to ensure that these rules are followed.
Consumers are however strongly advised to carefully read the detail of any advert which interests them and to ask for the full information (such as the prospectus or other documentation) before making any investment decision.
The attention of consumers is drawn to the fact that most financial adverts may contain smallprint at the bottom (or top) of the advert. This can be useful for including detailed information that consumers may be interested in, without cluttering up the appearance of an advert or obscuring the main message. Sometimes, however, smallprint contains important information about a product that one would not get from reading the main part of the advert. The danger is that consumers may be left with an unbalanced picture about the features and risks of the product being advertised if the smallprint is not read carefully.

The MFSA has taken steps to check the practice of placing important information in smallprint and, where necessary, has required advertisers to amend or withdraw the adverts in question. The situation is being monitored on an ongoing basis.




Last updated: Sep 07, 2016