Advertising investment products

Question: Our advertising agency has designed an ad for our investment services. It states that the customer can rely on the investment product because it is associated with the bank. Is this statement acceptable?

Answer: Statements and implications like this have been made, but that does not mean that they are ok. The rules about disclosures for non-deposit products are intended to provide the customer with a clear understanding of the difference between FDIC-insured deposits and investments that carry risk and have no insurance. The advertisement uses terms such as "rely" and "trust" in connection with the bank to induce the customer to come to the bank for the investment product. To do this, it is communicating that the product is better or safer because it is associated with a bank. The advertisement implies that the bank gives better advice than an investment advisor who is not associated with a bank. This is precisely what concerns the FDIC. Advertisements that imply an advantage of dealing with a bank for investments risk inducing the customer to assume or understand that FDIC deposit insurance is somehow going to protect the customer. This crosses the line. We advise against this approach to advertising investment products.

Copyright © 2003 Compliance Action. Originally appeared in Compliance Action, Vol. 8, No. 11, 11/03