By: Staff Reporter
A television advertising campaign has caused tension between the credit unions and banks to reach boiling point.
Last week, Abacus announced that Australia’s credit unions would launch a $2.5 million advertising campaign in a bid to capture greater market share.
But the Australian Bankers’ Association (ABA) has said the advertising campaign misleads consumers.
Last week, independent company InfoChoice released research findings on behalf of Abacus, stating that home owners with a mortgage from a credit union or building society could be up to $35,000 better off over the life of the loan.
“The research done by Infochoice, is concerning because it doesn’t reveal to consumers the average interest rate charged across credit unions/building societies, but simply cherry picks from only four of 122 credit unions and building societies,” ABA chief executive Steven Münchenberg said.
“Infochoice selectively used the best variable rates from only four credit unions/building societies but did not make the same comparison for the banks. It compared ‘apples and oranges’ when it should be a like-for-like comparison.”
"This isn’t a robust analysis, it is a misleading comparison and does nothing to inform the consumer of differences between financial institutions.”
However, Abacus chief executive Louise Petschler has hit back, saying the research contains clear methodology that justifies the basis of the calculations.
"We are confident in the approach used by InfoChoice and surprised by the ABA's response" Ms Petchler said.
"Our advertising campaign aims to let consumers know about the choices they have in banking.
"We're encouraging more Australians to look beyond the big banks and to consider the alternative that mutuals offer.”