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Overseas properties, investment schemes to come under advertising guidelines
ENHANCED guidelines under Singapore's code of advertising practice unveiled on Monday have widened the regulatory scope for advertisements on investments to include overseas properties and investment schemes, and even investment seminars.
From Aug 12, these advertisements have to comply with a higher standard of warnings, disclosures and qualifications to ensure potential risks are properly highlighted to the public; they should also not contain claims that give the impression that an investment is safe, low-risk or risk-free or can generate quick, easy or high profits with little or no risk.
Among the new guidelines, advertisements on overseas property-related investments should clearly state what investors are acquiring (such as interest in the land, building, or property within the building). Advertisements on overseas real properties cannot mislead or exaggerate their actual location, physical nature, legal titles, and the developers' financial position. For properties being developed, their advertisements have to state the building permit or approval numbers and the identity of the issuing authority.
These guidelines apply to all media platforms, including online advertisements, said the Advertising Standards Authority of Singapore (ASAS), an advisory council under the Consumers Association of Singapore (Case).
Case executive director Seah Seng Choon told The Business Times that the review started 11/2 years ago, amid a proliferation of advertisements on overseas properties and investment instruments. Advertisements on seminars promising that attendees could earn S$100,000 in a few months in some cases also caught regulator's attention.
"We want to make sure that if they make such claims, they need to substantiate," said Mr Seah. "If they do not comply with our requirements, we will not allow the advertisements to see light of day."
The new guidelines are also seen levelling the playing field between local and overseas developers, hence closing up the loophole that overseas developers are not subject to local requirements when they promote their projects here.
Though ASAS' advertising code is self-regulatory, Mr Seah said that advertisers risk hurting their businesses if they keep having their advertisements rejected by ASAS and withheld by media owners; in extreme cases, there is also additional sanction of adverse publicity detailing ASAS' probe.
Advertisers and media owners with contracts signed prior to Aug 12 will be given a three-month grace period to fulfill the existing contractual requirements and adhere to the enhanced guidelines.
Elsie Chua, head of marketing at SPH that owns this paper, said that if there are advertisements that contravene ASAS guidelines, the group would advise the clients to make the necessary changes. "These new guidelines serve to increase transparency and offer more details to readers," she said. "In fact, some of these had already been implemented by some clients on their own accord."
Concerns over a proliferation of untruthful advertisements have heightened lately.
Last month, ASAS took issue with developers Funtasy Island Development (FID) and Seven Seas FID for their print-media advertisements on the Batam villa project Funtasy Island.
It had three reasons for its objection: One, it showed landmarks such as Marina Bay Sands visible from the villa; two, it promised a guaranteed rental of 7 per cent a year, and three, it quoted an anonymous buyer on how wonderful the development was.
There was also market talk that a couple of Iskandar projects did not earlier obtain building permits before they started selling.
With the enhanced guidelines of ASAS, testimonials and endorsements must be representative of the average consumer. ASAS may contact endorsers to verify the authenticity of their testimonies.
Property agencies note that ASAS' enhanced guidelines are in line with the practice guidelines on ethical advertising issued by the Council for Estate Agencies (CEA) in 2011 and a CEA practice guideline issued last year for estate agents and salespersons marketing foreign properties.
Knight Frank executive director Tan Tee Khoon said: "These enhanced guidelines are not unfamiliar to estate agents and salespersons. They are definitely a move in the right direction of responsible advertising, so that prospective buyers or investors are not misled.
"That said, it may be challenging for a property advertisement to encapsulate all the requirements of the ASAS enhanced guidelines," he added. "The advertisement may have to be sizeable and wordy to make clear the charges, expenses or tax liabilities when these can be found in the sales-and-purchase agreement."
ASAS' guidelines require warnings, disclaimers and qualifications to be legible to an unaided eye, that is, they should not be in a font smaller than the smallest font used in affirmative claims, subject to minimum font sizes.
With a recent spate of seminars being used as avenues to promote investor club memberships, the enhanced guideline requiring advertisers to say so if an investment seminar will involve any property booking or transaction is necessary, Mr Tan said.
ECG Property chief executive Eric Cheng noted that many foreign players have poured into Singapore over the past two years from the UK, Japan, Malaysia, Bangkok, Cambodia, Indonesia to as far as Brazil, with their advertisements aggressively placed. The majority of weekend advertisements are taken up by foreign property launches, he noted.
Some overseas property markets gained popularity with mass-market investors here due to their smaller price quantums, but this is one segment the government is most concerned about, Mr Cheng said.
Roxy-Pacific executive chairman and chief executive Teo Hong Lim said its more than 700-unit residential project in Kuala Lumpur will be launched in Singapore and Malaysia concurrently in the next two to three months, with Huttons as its marketing agent. He added that having a local marketing agent provides an added layer of assurance, given that agencies here are obliged to comply with CEA requirements that the details of the project are true and accurate.
From January 2013 to May 2015, ASAS received 41 instances of feedback on advertisements by companies offering training as well as tips on investing in financial instruments and properties. It said: "Of particular concern was investment in overseas properties. Out of 41 cases, 12 had involved advertisements on overseas property investment, which contained non-substantiated claims."
Case received 23 consumer complaints over the same period on overseas property investments. Most of the complaints involved consumers who had invested in overseas properties, but were unable to get back their promised returns for payouts.