Credit union slams Big 4 for misleading consumers

by Calida Smylie23 Apr 2014
The Big Four should be forced to disclose parent relationships with smaller banks to consumers, who are being duped by illusions of competition, said Credit Union Australia.

In its submission to the financial systems inquiry, Australia’s largest customer-owned financial institution asked the government to examine anti-competitive issues which impinge on the customer-owned sector and introduce a positive disclosure requirement on major banks.

Recent research conducted for the customer-owned sector found over 80% of Australians are unaware the Big Four, which hold nearly 90% of mortgages, own other mainstream home loan lenders too.

As an example, when Westpac advertises for Bank of Melbourne and BankSA it conveys a misleading impression to consumers by making Westpac’s ultimate ownership of both brands obscure, said CUA.

“Consumers should not have to bring forensic skills to the task of finding true alternatives to the Big Four banks. Ultimate ownership should be reasonably apparent in advertising for example, not hidden in the finest of fine print.”

But although CUA has complained to regulators over what it sees is a misleading practice, ACCC said the issue is not relevant to its responsibilities and ASIC said there is no legislative basis for it to force divulgence on the banks and it is difficult to interpret the advertising as misleading or deceptive.

“The only option available to mutuals is to press the government to institute a positive disclosure requirement. This would be a case where more regulation would be a good thing,” CUA said.
 
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COMMENTS

  • by Stephen Sillett 23/04/2014 10:02:40 AM

    CUA should concentrate on becoming more competitive and this wouldn't be an issue. There is a reason the Big 4 dominate - consumers are more informed today then ever before.

  • by James 23/04/2014 10:18:19 AM

    CUA are right. The Big 4 have been allowed to buy up any meaningful competition and its not emphasised enough as to who owns who..... The next step of disclosure would be showing how much commission the lenders receive off every LMI policy.

  • by Coast Broker 23/04/2014 10:54:21 AM

    I am a member of Plan Australia and have never had an issue explaining to clients how the NAB group owns Plan Australia along with 2 other Broker Groups. I always make a point of explaining the ownership of Plan Australia and if anything it helps how my clients view me and my business. Clients realise that I am still an independent broker with my own brand customer service standards so have never had an issue where a client does not want to deal with me. Maybe it is more the case of some Brokers having sour grapes with the Majors. By the way I am not a big supporter of NAB or Homeside products and this does not effect my business in how Plan Australia management view my business.