GE Money changes ads
After claiming it had "one of the best rates in the market", GE Money has changed its loan advertisements, following concerns by the regulator.
The Australian Securities and Investments Commission (ASIC) found GE Money's promotion of personal loans and debt consolidation loans were potentially misleading, as its products were subject to risk-based pricing.
GE Money described the interest rate online as: "One of the best rates in the market, from 12.99 per cent (comparison rate 14.20 per cent) for loans over $10,000 for new customers."
However, a consumer applying for the product would be offered an interest rate between 12.99 per cent per annum and 34.95 per cent per annum. ASIC was concerned with the advertising, as only some consumers qualified for the lowest rate.
ASIC was also concerned that:
- the use of the qualifying term "from", in the context of risk-based pricing with a significant variation between lowest and highest cost, was insufficient to prevent consumers being potentially misled;
- the headline statement, "One of the best rates on the market", where it appeared on a standalone basis was, in this case, too strong a claim to be effectively qualified;
- in some cases, advertising failed to provide any disclaimer or clarification; and
- the disclaimer on the website failed to disclose the interest rates for risk pricing of loans and how high interest rates could actually go.
ASIC deputy chairman, Peter Kell said: "Price-based marketing fosters competition and can be beneficial to consumers. However, promoters need to ensure that consumers are not misled about an advertised interest rate when their risk profile may affect the actual interest rate offered."
Recommended for you
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
The Senate economics legislation committee has recommended Schedule 1 of the Delivering Better Financial Outcomes legislation be passed as it is a “faithful implementation” of the recommendations.
Treasurer Jim Chalmers has handed down his third budget, outlining the government’s macroeconomic forecasts and changes to superannuation.
