CBA changes home loan ad after ASIC complaint

The Commonwealth Bank has agreed to change the way it advertises its “Wealth Package” home loans due to concerns from ASIC that ads promoting the product did not mention the $350 annual fee in the advertised comparison rate.

The Wealth Package is offered to existing customers who already have a Commonwealth Bank mortgage of at least $150,000.

ASIC said rates used in ads were incorrect and potentially misleading.

“Under the National Credit Code, credit ads that include an annual percentage rate must also include a comparison rate. Comparison rates incorporate the fees, charges and interest relating to a loan to better reflect the true cost of credit,” the regulator said.

“ASIC was concerned CBA’s home loan ads promoting its Wealth Package loans did not include the Wealth Package $350 annual fee in the advertised comparison rate.

“When promoting a package loan, any fee in connection with a loan to qualify for the advertised annual percentage rate must be included in the comparison rate. Not including all fees and charges results in a comparison rate not reflecting the loan’s true cost.”

ASIC commissioner Peter Kell says comparison rates help consumers work out the actual cost of credit.

“It can be difficult for people to compare home loans with different combinations of interest rates and fees. This is why credit providers must include the comparison rate when they advertise a rate or a weekly payment for a home loan, and ASIC will be active to ensure compliance in this area,” Kell says.

“Consumers will be more confident if they have information that allows them to properly understand and compare financial products.”

Later this year, ASIC will release a consultation paper on advertising of credit products.

The slap on the wrist for the CBA comes soon after the launch of home loan key fact sheets, which credit providers must offer customers on request.