No surprises as ASIC releases ad guidelines

by Caroline Dann23 Jul 2012

ASIC's latest guidelines for credit advertising reveal no surprises, with misleading claims, lack of comparison rates and patchy terms and conditions getting the biggest rap.

It released the consultation paper CP178 last week. The 14 guidelines provided key examples of how advertising can infringe ASIC regulations.

Among them was the case of a broker which claimed its home loan could help borrowers pay off a loan quickly with little interest. ASIC said the broker failed to explain that larger repayments were needed to achieve the promotional offer.

Other areas of concern included benefits not being available to all applicants, the difference between 'no fees' and 'waived fees' and the grey area of celebrity testimonials.

ASIC said brokers should, in practice, recommend only a select number of loan options to clients.

"A mortgage broker may have access to loans from a large number of lenders. However, in practice, the mortgage broker generally only considers one or two main lenders when making a recommendation to a client. In this case, it may be misleading if the mortgage broker advertises that ‘a wide range of lenders is available’," it said.

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COMMENTS

  • by David Pattemore - DPF Mortgage Specialists 23/07/2012 11:33:11 AM

    Any Brokers who restricts the consideration of the clients' loan options to only 1 or 2 lenders should be prevented from referring to themselves as Mortgage Brokers but rather be required to promote themselves as "Lending Agents of Bank ABC + Bank XYZ".

    Lending Agent is a more accurate title and would assist borrowers to easily identify those in the industry who do consider & offer loan options from a large range of Lenders / Loan Products and those who do not.

    This simple solution can be easily monitored by ASIC + MFAA / FBAA + Aggregators via Commission Statements and would fall within the principles of NCCP to protect the borrower.