A series of advertised competitions offering prizes as an incentive to ING superannuants to consolidate their super into ING’s super products is remarkable for both the number of rollovers it has generated and the level of compliance risk and scrutiny to which it has been subject.
ING’s Employer Super ‘Win Your Own Renault Mégane’ (Cabriolet Coupé Dynamique’, worth $52, 123) is the latest in a series of about 20 similar competitions to collectively generate nearly $72 million in super roll-overs for the group.
Members of ING Integra Super and ING Corporate Super need only to rollover any outstanding super into ING products by October this year to enter a draw for the car (among other prizes), or by June 29 to become eligible to win a $500 early bird bonus.
The latest competition (advertised at www.rollyoursuper.com.au) was launched to “celebrate” ING’s sponsorship of the Renault Formula 1 team in the Formula 1 Australian Grand Prix in February this year.
It follows hot on the heels of ING Employer Super’s ‘Rev up your Super’ competition, which offered existing ING superannuants a main prize of two tickets (plus flights and three days luxury hotel accommodation) to attend the Australian Grand Prix.
Approached for comment, an ASIC spokesperson said that while it is not against the law to offer financial services consumers a prize, advertisers need to ensure advertising is not misleading or deceptive and not unfair in any way.
The spokesperson said that while ASIC “doesn’t make a habit of commenting on the compliance or otherwise of individual ads”, a compliant ad would need to enable a person to “make a fair and accurate decision about the advertised product based on all of the right disclosures”.
She added that ASIC “doesn’t have a role of approving ads before they are run, although we do routinely and actively review ads in the financial services sector — and when we see an ad that we believe breaches the law we will take action”.
For its part, ING professes to have put the competitions through the compliance wringer in terms of their format and their targeted audience.
The ads are part of an extensive marketing program that communicates with our existing clients under our very vigorous compliance framework within ING, according to Mark Pankhurst, head of product and marketing at ING Employer Super.
The competitions are “simply a service we provide to help our existing customers consolidate their super accounts so they don’t pay multiple fees by having multiple super products,” according to Pankhurst.
The compliance risk involved in running the competitions is implicit in last year’s shadow shopping survey on super advice by ASIC, which assessed the compliance of advice given to consumers after the introduction of Super Choice with the Corporations Act.
The shadow shopper survey found that where consumers were advised by respondent advisers to switch funds, a third of this advice lacked credible reasons for doing so, and risked leaving the consumer worse off.
It also found some advisers were not investigating the client’s current super fund before recommending a new fund, that Statements of Advice (SOAs) were not adequately disclosing the reasons for recommended action, and that SOAs were not adequately disclosing the consequences of switching super funds.
ING’s ads essentially (and explicitly) ask superannuants to switch funds — and therein lies the heightened compliance risk, despite being targeted solely at existing ING clients and notwithstanding all the compliance safeguards built into the competition.
These safeguards include warnings that “moving funds may involve a termination penalty”, that there “may be investment, tax and insurance implications”, and that if superannuants “have insurance cover, they need to be certain that cover is maintained during the transfer”.
Above the safeguards, the competition tagline boldly encourages ING members not to remain as “one of the nine million Australians in the paid workforce that have more than 25 million super accounts”.
Superannuants are encouraged to “use the ING online tool to find and reclaim a share of the $9.7 billion in lost super that is rightly yours” by searching for lost super via the Australian Taxation Office’s linked website.
In addition, the ads list the advantages of a rollover as “paying only one set of fees”, having “one set of paperwork and one point of contact”, and that a “larger account balance can work harder for you”.
They proclaim that “all you need to do to enter the competition is to roll over money you have in other super funds into your ING account; if you have more than one super account to roll over, simply complete a form for each account you have. The more funds you roll over the more chances you have of winning!”
Pankhurst could not provide results for the two latest competitions, because the “Win Your Own Renault Mégane” is still ongoing, and “we are still tabulating the results of the previous ‘Rev up your Super’ competition”.
“It is early days in this campaign (despite a winner already having been announced), as we have still got people coming in with rollover requests, and consequently it will probably take some months to get an understanding of the results.
“However, I can tell you that we have held more than 20 of these types of rollover initiatives over the past few years, and from these we have generated nearly $72 million in rollovers.
“Comparatively, we get a lot more roll-overs from advisers on behalf of their clients, and also from people deciding to roll-over on their own initiative, but this amount ($72 million) is still significant coming purely from the marketing initiatives we have had with existing clients.”
Pankhurst added that ING would “certainly consider” running another competition in the same prize-giving format, as “we have been very happy with the response these have generated and also with our association with Formula 1 racing and the (media) coverage we got from our sponsorship of the Formula 1”.
Elaborating on the compliance aspects, the ASIC spokesperson told Money Management that the regulator “doesn’t have an intrinsic problem with the compliance aspect of an ad for a financial product that carries an incentive”.
“The law, particularly with regard to the Corporations Act, is not prescriptive about ads carrying incentives, in the sense that it doesn’t state that a piece advertising a product as opposed to a piece advertising a product in conjunction with a competition is or isn’t against the law.
“However, the law (Act) does say that you need to ensure advertising is not misleading or deceptive and not unfair in any way, and it is therefore the responsibility of the licensee to ensure that an ad doesn’t contravene these key provisions.”
One of ASIC’s key messages to consumers “when they are in a decision-making process”, she said, is that super “is a long-term product, and superannuants need to be focusing on their long-term financial needs and security, as opposed to the short-term and immediate rewards”.
“Furthermore, of course, it’s vastly important that consumers never switch their funds without first comparing the costs and the benefits that would obviously either be lost or gained.
“Consumers also need to make themselves aware of the costs or consequences of leaving their existing funds by way of, for example, paying exit fees or the loss of their insurance.”
