Credit Union Australia Ltd (CUA) has agreed to maintain interest rate discounts for eligible home loan customers after the Australian Securities and Investments Commission (ASIC) raised concerns that advertising for its ‘Rate Breaker’ home loan product was misleading.
The Rate Breaker advertisements highlighted a 1 per cent discount off the average standard variable interest rates advertised by the 'big four' banks. However, under the terms and conditions of the product, CUA had stipulated it retained the right to change the one per cent discount at any time and that the interest rate could not fall below three per cent per annum.
ASIC’s view was that these terms and conditions were not sufficiently displayed and that the ads gave the impression the discount applied to the life of the loan.
CUA has entered into an enforceable undertaking with ASIC as a result of the commission’s investigation.
ASIC Deputy Chairman Peter Kell said consumers should be able to trust the promises provided in the marketing of home loan products.
“ASIC expects that financial services firms will provide clear and accurate information to consumers in their advertising, and we will act when those expectations are not met,” he said.