Brokers have been warned about the “widespread industry practice” of “false home loan advertising”.
It is illegal for brokers to make headline claims that are invalidated by the fine print, according to the MFAA.
The MFAA tribunal recently heard a matter that involved “headline claims of a possible minimum deposit” that was “generally unavailable to borrowers” due to other costs such as LMI.
“The MFAA tribunal has expressed concern about a widespread industry practice in relation to home loan advertising. This concern arose out of a specific matter before the tribunal,” the MFAA said.
“However, the tribunal observed that the conduct at issue was widespread, and hence needed an industry-wide approach which did not penalise one particular MFAA member.”
The MFAA told brokers that the “dominant message” of an advertisement must be accurate, and that it is not enough to qualify an inaccurate headline with fine print.
“The ACCC and ASIC regularly raise concerns about such conduct and have taken companies to court for so-called ‘drip advertising’, fine print qualifications and the need for full disclosure of advertised offers,” the association said.
“Both the ACCC and ASIC take the view that such conduct breaches the law and, in particular, provisions relating to misleading or deceptive advertising and conduct.”
The ideal approach is for brokers to avoid claims of minimal deposits in their advertising, because borrowers will always need more, according to the MFAA.
“A more acceptable approach would be a higher percentage which factors in the unavoidable costs,” it said.
“A compromise is to have a prominent qualification part of, or alongside, the prominent claim.”
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