Du Val to FMA: mortgage fund ads were not misleading

The property group challenges FMA's order last year to pull the allegedly deceiving ads

Du Val to FMA: mortgage fund ads were not misleading

Du Val Group has challenged the Financial Markets Authority (FMA) in court, saying the local property firm’s social media advertisements were not misleading.

Last year, FMA ordered Du Val Group to remove its advertisements for its mortgage fund from social media because they were likely to deceive investors. It said the company made misleading claims about “zero fees” despite retaining all the profits above the 10% fixed return that was paid to investors.

Read more: FMA orders Du Val to remove mortgage advertisement

The regulator also said that while the company used the wholesale investor exclusion, which was designed for highly experienced and/or well-resourced investors, Du Val appeared to be using social media to target less experienced investors.

Read next: FMA orders Simplicity NZ to remove misleading advertising

Davey Salmon, Du Val's lawyer, told the Auckland High Court that similar claims about fees were made by banks all the time and wholesale investors understood that any business that took a deposit did so for profit, RNZ reported.

“The suggestion that it's misleading to say ‘no fees’ where it is manifestly an evident part of the trading scheme of New Zealand that all deposit takers have a profit notice and that fees are understood to be the things taken out of their account that reduces their apparent interest earned, that's not a meaning that the words are capable of having. It's not a capable interpretation to say that's misleading,” Salmon said.

Salmon also said there was nothing misleading about targeted ads being seen by the wider audience, which happened all the time, such as an ad for farming products or a motor car that claimed it was the most efficient and powerful in its class.

“Some novice who's not interested in cars like me doesn’t know what that means,” Salmon said in court. “I have no idea what the class is, I see the advertisements all the time. It could lead me to thinking that it’s more efficient than it is, because it's in a class of very inefficient motor vehicles. But the people who actually turn up and buy these things are in a different sector than the novices who don't shop for cars.”

At the time of reporting, FMA was just beginning its submission, RNZ reported.