By Faraz Shauketaly
Sri Lanka does not suffer from a lack of warnings. It suffers from a lack of memory.
Every few years, the country rediscovers—usually after the damage is done—that advertising is not a neutral act. It persuades. It reassures. It legitimises. And when left unchecked, it does precisely what it is designed to do: convince ordinary people to part with their money.
Yet Sri Lanka, astonishingly, still operates without a national Advertising Standards Authority (ASA)—a statutory, independent body empowered to scrutinise, restrain, and sanction misleading commercial claims before they metastasise into national scandals.
This is not a new argument. Some of us made it years ago—loudly as was the DNA of the Sunday Leader, post the murder of its Editor — after the collapse of Golden Key, when advertising functioned not as information but as seduction. Several years have paased since that debacle. Did it escape regulators because of the person who headed that company? Lalith Kotelawala?
The Golden Key debacle reduced thousands of trusting citizens to penury — a brutal reminder that misleading financial advertising can destroy lives long before regulators wake up.
Golden Key was not a licensed deposit-taking institution. It was a limited liability company that accepted money from the public, issued charge cards against those so-called “deposits”, and promised interest rates wildly above industry norms. The red flags were not subtle. They were screaming. And yet the company advertised freely, confidently, and continuously.
The regulators missed it. Or chose not to see it. And when the edifice collapsed, depositors —lured by glossy assurances and improbable returns—were left with less than 15 percent of their money. The promised interest vanished entirely. The scheme, stripped of euphemism, was a Ponzi structure dressed up as innovation.
Had Sri Lanka possessed a robust, legally empowered Advertising Standards Authority, Golden Key’s advertising would not have survived first contact with scrutiny.
No serious regulator would have allowed sustained public promotion of unsustainable returns without intervention. An ASA would not have needed forensic accounting. It would simply have asked the most basic question advertising regulators ask everywhere else: how can this be true?
Instead, the burden fell—as it always does—on the public. Caveat emptor, we were told, as if advertising were a private whisper rather than a mass broadcast.
The lesson, apparently, was not learned.
Fast-forward, and the same pattern repeats in different guises. Touchwood Investment Company, then cloaked in integrity through a public listing , raised eyebrows long before its problems became unavoidable. Again, aggressive promotion. Again, claims that outpaced fundamentals. Again, retail investors mistaking repetition for legitimacy. And again, no specialised body tasked with asking uncomfortable questions before capital was misallocated.
“This is not an argument against risk. Markets require risk. This is an argument against unchecked persuasion masquerading as information.”
What makes Sri Lanka’s failure particularly inexcusable is that the country consciously embraced an open economic model as far back as 1977. Under a new Constitution and a radically liberalised policy direction, markets were opened, capital encouraged, and private enterprise celebrated. But while the economy was opened up, consumer protection architecture was left in the pre-open era.
No one thought to import the institutional guardrails that open economies elsewhere considered essential—chief among them, an Advertising Standards Authority.
In mature markets, an ASA does not stifle enterprise. It disciplines it. It does not censor. It interrogates. It does not decide which businesses succeed. It ensures that persuasion does not outrun plausibility.
Sri Lanka, by contrast, relies on a scatter of after-the- fact responses: a regulator here, a circular there, a warning notice once the headlines become unavoidable. By then, advertising has already done its work. Money has moved. Confidence has been monetised. Losses have been socialised.
The most dangerous misconception is that advertising regulation is a “soft” issue. It is not. In a digital economy, advertising is often the first—and only— interface between complex financial products and unsophisticated investors. When that interface is unregulated, the market is not free; it is asymmetrical.
The absence of an ASA is not an accident. It is a legislative failure—decades long, bipartisan, and unforgivable. Parliament opened markets without building the institutions needed to protect participants within them. And every time a scandal erupts, lawmakers feign surprise.
“The truth is harsher. Without an ASA, Sri Lanka has chosen to let advertising operate on trust in a country where trust is already thin. It has chosen to learn lessons only after citizens have paid tuition fees they never signed up for.”
A national Advertising Standards Authority— statutory, independent, and publicly accountable— would not prevent every failure. But it would force early questions, flag implausible claims, and slow the velocity of deception. It would save money, confidence, and credibility.
The cost of not having one is written in the wreckage of Golden Key, echoed in later market misadventures, and quietly borne by households who believed what they were told.
Sri Lanka liberalised its economy nearly half a century ago. It is long past time it regulated the voice that sells it.
“Advertising without consequence is not freedom. It is an invitation—to the next collapse.”
And this time, legislators should not pretend they didn’t know better.
(farazcolombo@gmail.com)
