What a guarantee can and cannot cover
“The safety or security of a product should not be overstated. There are very few products that can claim that they are fully insured or guaranteed.”
ASIC Regulatory Guide 234, RG 234.30
The note under that paragraph gives one exception, and its edges. The Australian Government’s Financial Claims Scheme “protects deposits in authorised deposit-taking institutions (ADIs) such as banks, building societies and credit unions up to a specified limit. It does not apply to investment products offered by an ADI.” APRA’s Financial Claims Scheme page links to a deposit checker for whether particular deposits are covered.
Some products do carry a form of guarantee. Moneysmart’s glossary describes a capital guarantee, also called capital protection, as protecting investors against significant loss of the amount invested, and adds that it can contain clauses and performance hurdles that limit the protection. A guarantee is a set of terms, then, and the terms decide what it covers.
Words that promise more than the product
RG 234 asks for care with terms such as “free”, “secure” and “guaranteed” where the way they are used does not match the meaning consumers commonly give them. Used inappropriately, it says, such terms can:
“(a) create expectations that cannot be met; (b) indicate a certain level of security that does not exist; and (c) indicate different levels of protection and different levels of risk.”
ASIC Regulatory Guide 234, RG 234.122
- A rate that can change. When a credit card contract lets the provider raise the interest rate at any time, ASIC says the card’s promotion should not contain a “guarantee” that the rate will stay low.
- “Invest with certainty!” A debenture issuer used that phrase and “The rate you choose is secured for the term of your investment”. ASIC was concerned that “certainty” and “secured” materially overstated the safety of investing in debentures to vulnerable investors, and accepted an enforceable undertaking from the issuer to stop the advertising.
- Notes sold as if they were deposits. Advertisements for promissory notes presented them as comparable to bank term deposits, with no risk of default and the principal repaid in full on maturity, when they were of significantly higher risk, the principal could be lost and repayment could be extended indefinitely. The court found the conduct misleading or deceptive and ordered penalties.
A return that sounds too regular
One of ASIC’s examples concerns options-trading software marketed with the lines “Options trading is easy” and “Returns of 5–10% per month and 60–120% per year can consistently be achieved”. ASIC accepted an enforceable undertaking under which the company agreed never again to use those phrases for options trading, and to refund people who bought after hearing them.
The claimed ranges are quoted in ASIC’s Example 17; the arithmetic is this guide’s.
The yearly range in the advertisement is the monthly range multiplied by twelve. Worked as compounding, the same monthly figures come to far more. Either way, the claim went further: it said the return could be achieved “consistently”, which is a claim that the rate in the sum would never vary. As Exercise 5 notes, Moneysmart says the combination of high returns and low risk does not exist. (The reading of the claim is this guide’s.)
Promises about the future
A guaranteed return is a statement about the future, and the law has a specific rule for those. RG 234 notes that under section 769C of the Corporations Act, a representation about a future matter for a financial product made without reasonable grounds is taken to be misleading, and that forecasts in advertising should be used only where they are relevant and there are reasonable grounds for them.
What Moneysmart says to watch for
Investment scams cost Australians more than $837 million in 2025, by the National Anti-Scam Centre’s count, as Moneysmart reports. Among the things it says investment scammers promise are high returns with little or no risk and guaranteed profits, and its checklist before investing treats an offer of easy money or guaranteed returns as a reason to stop and step back.
Several of its checks are about who is making the offer:
A licence, or authorisation
Anyone offering investments in Australia needs an Australian financial services (AFS) licence, or must act under someone else’s.
A licence is not an endorsement
Holding an AFS licence does not mean ASIC endorses the company, product or advice, and it does not guarantee that an investment is safe.
The register, not the advertisement
Moneysmart’s advice is to verify the licence holder’s name and number on ASIC’s Professional Registers and make sure they match the business being promoted, including any website listed, rather than relying on advertisements, websites or search results.
The alert list
Moneysmart keeps an Investor Alert List of recent warnings.
Back to the first sumEvery return on this site was worked from a rate fixed in advance by a source’s example, because a worked example needs one. Moneysmart’s starting point for real investments is that none is completely risk-free. An offer that fixes a high return in advance and calls it guaranteed is asking to be read like one of these exercises, and that is the kind of offer ASIC and Moneysmart single out.