ASIC warns mortgage lenders over misleading advertising
Corporate watchdog ASIC has continued its crackdown on mortgage and savings advertised offerings that it feels may mislead consumers.
Having required mortgage lender Resi to give equal prominence to mortgage comparison rates, ASIC has now prompted RAMS to change how it advertises its 5.75% savings account, which is issued by parent company Westpac.
ASIC Commissioner Peter Kell says advertisements should give balanced information to ensure the overall effect creates realistic expectations about a financial product or service.
He reminds promoters of financial services that ASIC will be regularly reviewing ads and will take action when they don’t comply with the law.
The RAMS 5.75% savings account includes a bonus 0.8%, which is only payable subject to a number of conditions being met including making a minimum deposit of $200 per month and making no withdrawals in the month.
The ASIC press release noted its concerns surrounding the online, television and outdoor ads, which featured a prominent headline claim offering a 5.75% interest rate, followed with smaller statements that it included a “0.8% p.a. Bonus” and “monthly deposit conditions apply”.
ASIC notes “concerns that ads promoting the online savings account were potentially misleading or likely to mislead”.
“ASIC was concerned that the ads left out important information and failed to give enough prominence to the conditions associated with the 0.8% bonus.
“Of particular concern to ASIC was that the ads did not disclose that in order to achieve the monthly bonus rate, consumers could not make any withdrawals from the account during the month,” said ASIC.
A spokesperson for RAMS says the company responded promptly to ASIC’s concerns and no customers have been adversely affected.
“ASIC advised us of some concerns relating to the prominence and completeness of conditions to qualify for the high bonus variable rate of 5.75% p.a. in our advertising.
“RAMS moved quickly to address these concerns by promptly amending all advertising including additional text and voice over to specify the conditions (such as no withdrawals during the month) more prominently in television commercials,” says a spokesperson.
ASIC recently released a Regulatory Guide 234 Advertising financial products and advice services: Good practice guidance.
“ASIC’s guidance will help industry participants understand their obligations but we are also sending a message that we will take action in response to misleading ads for financial products and services,” says Kell.