ASIC demands equal prominence for mortgage comparison rate in online mortgage advertising

Mortgage lenders have been warned they must give equal prominence to the comparison rate when advertising mortgage products online.

This follows non-bank lender Resi agreeing to change its online home loan advertising following ASIC concerns the ads “failed to adequately disclose the comparison rate on its home loans”.

The comparison rate is a single figure that includes both the interest cost and the other major fees and charges for a loan, making it easier for consumers to shop around and compare loans.

The National Consumer Credit Protection Act 2009 (National Credit Act) requires any advertising of loan interest rates to include a “comparison rate” in equal prominence.

In the case of Resi, ASIC says it was concerned “that the ad’s comparison rate wasn’t prominent enough and although the required statutory warning about the accuracy of the comparison rate was given, there was no clear reference to that warning. 

“In a separate part of the website Resi included a table of other home loan products together with their interest rates but did not include any comparison rates,” says the corporate watchdog.

“ASIC strongly encourages credit providers and brokers to carefully review advertising practices and all promotional materials to ensure compliance with the National Credit Act as well as ASIC’s expectations.” 

ASIC commissioner Peter Kell says: “consistent disclosure of comparison rates in marketing material is a key tool for consumers trying to shop around and find the best rate on their home loan, and ASIC is closely monitoring this area. 

“ASIC will act when advertisements don't comply with the law,” he adds. 

ASIC acknowledged that Resi was co-operative in responding to its concerns and “promptly corrected its website”.