MyRate makes changes to advertising in response to ASIC concerns
Changes to the MyRate Pty Ltd (My Rate) website (myrate.com.au) have been made following ASIC concerns that the home loan interest rates advertised had the potential to likely mislead consumers.
The non-bank lender's website was said to give the impression that the advertised rate for variable home loans applied to both existing and new loans. In fact, it only applied to new home loans, meaning those with existing variable rates were charged interest above the advertised rate.
Photo: Screenshot of the MyRate website from July 1, 2012. Source: The Wayback Machine
MyRate has since made prominent changes to its website to state the rate only applies to new loans, as well as have agreed to write to all affected customers to confirm this fact.
ASIC deputy chairman Peter Kell said that the expectation from credit licensees is that clear and accurate information is provided in advertising.
Photo: The MyRate website as of December 9, 2013
This comes after Mortgage Choice recently paid a penalty for potentially misleading advertising, and appears to fit with Kell's warning at the time that "ASIC will continue to act in instances where advertisements contain representations about a product that are false or misleading".
"Where advertising promotes a particular product feature, such as a low interest rate for a loan, the credit provider needs to make sure that any qualifications about how that rate applies are clear and that the information is not misleading in any way," said Kell.
ASIC refers to their guide around advertising financial products and services here, for those concerned.
The loans on MyRate are funded by ING Bank (Australia) Limited.
Customers who think they may have been misled are encouraged to contact: enquiries@myrate.com.au, 1300 663 558 or Suite 901, 447 Kent Street, Sydney, NSW 2000.
In 2006, MyRate, as well as One Direct, revised their advertising for variable home loan rates after ASIC raised concerns over misleading promotional material. This was after their low, variable home loan rate did not reflect a Reserve Bank interest rate increase in August.
ASIC enquiries discovered that both lenders decided to postpone a decision over whether to pass on the increase until 2007. ASIC noted that they were concerned the promotional material did not make it clear that at a later stage the rate may be increased to reflect the RBA's movement, that customers would not expect a variable rate to be affected by official interest rates announced some time before they signed up and that the advertised rate was used as the basis for a comparison with another rate that could be inconsistent in the long-term.
One Direct and MyRate altered their advertising to reflect a potential future increase, with ASIC executive director, consumer protection, Greg Tanzer, noting in 2006 that he welcomed the constructive response received.
"Consumers are likely to respond positively to low home loan interest rates," said Tanzer.
"If those rates are subject to changes or conditions that are unusual or unexpected it is vitally important that they be prominently disclosed and explained," he said.
Since 2006 a number of new guidelines have been brought out by ASIC regarding advertising for this industry.
MyRate currently has an 'Avoid Being Misled' guide available on their website, warning about:
Exaggerated claims of independence
Exaggerated guarantees
Out of date interest rates
Deceptive enquiry forms
Non-existent lenders
Advertising of bait and switch products
Editorial for paid finance products masquerading as "top" or "featured" listings
It notes the following: "Although it is illegal to advertise an incorrect rate, some lenders may not notify the comparison site. For instance, if all the lender rates go up, by not notifying comparison websites a lender could propel themselves to the top of the tables based on rate."