Credit Union Australia will maintain interest rate discounts for eligible home loan customers after being found of misleading advertising by the Australian Securities and Investment Commission.
CUA's advertisements for its 'Rate Breaker' home loan package promoted a 1% discount off the average standard variable interest rates advertised by the big four banks.
But the ill-displayed terms and conditions enabled CUA to change the 1% discount at any time and stipulated that the interest rate could not fall below a minimum rate of 3% per annum.
CUA will ensure all consumers who entered into a Rate Breaker Package loan up to August 31 will, for the duration of their loans, receive a discount of no less than 1% off the average of the variable interest rates advertised by the big four banks, unless it is below 0%.
ASIC Deputy Chairman Peter Kell says taking out a home loan is one of the biggest commitments a person or family could make.
“Consumers should be able to trust the promises and information provided in the marketing of home loans,” Kell says.
“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.”
The advertisements featured on television, in cinemas, the CUA website, and on public transport in Sydney, Brisbane and Melbourne.
CUT has to sufficiently highlight both the 3% per annum minimum interest rate and its ability to change the 1% discount rate in all future advertising of the Rate Breaker Package and it will notify existing Rate Breaker Package customers of its undertaking to honour the 1% interest rate discount by 30 September 2013.