Monday 06 November 2006 LAWFUEL – Law News, Law Jobs – Home loan lenders One Direct and MyRate have revised their advertising for variable home loan rates after the Australian Securities and Investments Commission (ASIC) raised concerns that their promotional material may have been misleading. Between July and September 2006, One Direct and MyRate advertised a low, variable home loan rate that did not reflect the most recent Reserve Bank interest rate increase announced in August 2006.
Enquiries by ASIC revealed that both lenders had deferred the decision about whether to pass on the interest rate rise, either in whole or in part, until 2007. ASIC was concerned that: • the promotional material did not make it clear that the variable rate might be increased at some later stage to reflect the August 2006 interest rate rise; • customers would not expect a variable rate to be affected by official interest rate increases announced some time before taking out their home loan; and • the advertised rate was used as the basis for a comparison with another ‘standard’ variable rate, showing long-term savings inconsistent with the potentially temporary nature of the advertised rate.
One Direct and MyRate have now amended their advertising to better inform potential customers about the nature of their current variable rate. In addition, if customers affected by a rate rise inconsistent with the original advertising decide to refinance their loan, they will not be charged a deferred establishment fee by either lender. ASIC’s Executive Director, Consumer Protection, Mr Greg Tanzer, welcomed the constructive response received from both One Direct and MyRate and urged other lenders to exercise care when developing promotional and advertising campaigns. ‘Consumers are likely to respond positively to low home loan interest rates’, he said. ‘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.
Background Conduct in relation to financial services that is misleading or deceptive, or likely to mislead or deceive, is prohibited by section 12DA of the Australian Securities and Investments Commission Act 2001. One Direct is owned by Australia and New Zealand Banking Group Ltd (ANZ). MyRate is a non-bank lender. It is funded by ING and uses Loan Services Australia to manage its mortgages. For further information contact: Greg Tanzer Executive Director, Consumer Protection Telephone: 07 3867 4704 Mobile: 0411 549 144 Angela Friend ASIC Media Unit Telephone: 03 9280 3338 Mobile: 0412 058 800List your legal jobs on the LawFuel Network