ASIC probe into online finance sector marketing
It may come as no surprise to many, but the Australian Securities and Investments Commission (ASIC) has launched an investigation focussing on the promotions of high interest online savings accounts by financial institution that may be misleading consumers.
A report from thesheet.com indicates complaints stem from people who have learned that some of the high introductory rates used to promote accounts have not held up in the face of falling rates and that introductory rate offers have been for such short terms that there is very little real value in them.
ASIC told the Australian Bankers Association and Abacus (ABAA) it was conducting a review of advertising of online savings accounts.
In a letter to the ABAA, ASIC says its review suggests “consumers are at risk of being misled by some of the current advertisements for these products”.
ASIC has set out a number of concerns in its letter that some of the advertising in question may promote special offer rates that are available for a period that is so short as to make the advertised benefits illusory; promote returns that, due to the manner in which the product is structured, cannot be obtained; promote product features such as no fees or no monthly fees that are not available to the majority of the target audience, and that include inadequate or inadequately prominent references to relevant qualifications or conditions to the effect of failing to meet relevant conditions.
An AMP Banking spokeswoman says the promotional material for the bank’s eASYSaver account on the AMP website states clearly that the special rate is a margin over the base rate that is subject to change, but others argue that short-term teaser rates inevitably lead to problems.
RaboPlus general manager, Greg McAweeney, dropped his institution’s promotional rate offer when he took up his post in 2008.
“In most cases there is a problem. The promotional rate period is too short, existing customers are excluded, customers think the rate is fixed when it is not. We would like to see ASIC get into this. We would like to see the banks agree to some standards,” explains McAweeney.