The full Federal Court has dismissed an appeal by Mayfair 101 against ASIC findings that it engaged in misleading and deceptive advertising and a $30 million penalty it was ordered to pay in relation to the action.
The findings and penalty were the result of court action started by the Australian Securities and Investments Commission (ASIC) in April 2020 that led to a decision regarding the advertising in March 2021 and the imposition of the penalty in December 2021.
In March 2021, the Federal Court found four companies in the Mayfair 101 Group, namely Australian Income Solutions, M101 Holdings, M101 Nominees and Online Investments, engaged in “misleading or deceptive conduct” among other things through claims Mayfair’s debenture products had a similar risk profile to bank term deposits when they actually exposed investors to significantly higher risk.
ASIC deputy chair Sarah Court said the regulator pursued the case through the Federal Court because of the importance it placed on accurate advertising of financial products.
“We were concerned that the advertising by the Mayfair 101 Group represented that their products were of a similar risk profile to bank term deposits, when that was not the case,” Court said.
“The decision to uphold the original findings of the Federal Court, and ASIC’s case that the Mayfair 101 Group’s advertising was misleading or deceptive, is a message to industry that financial products need to be accurately advertised or companies may risk substantial penalties.”
The ASIC appeal was successful in one aspect, with an injunction against the Mayfair 101 companies restraining them from using certain specified phrases in their advertising, marketing or promotion being set aside.
The court set aside orders made on 21 January 2022 restraining the Mayfair companies from using certain specified phrases such as ‘bank deposit’ and ‘term deposit’ in their advertising, marketing or promotion. This was on the basis that this injunction was “too broad and unworkable”.
In a separate but related legal matter, last month Mayfair 101 director James Mawhinney was successful in overturning a 20-year ban on promoting financial products and raising funds. But that court action resulted in previous interim injunctions being reimposed preventing the same behaviour.