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Credit union honours discounted rates after 'misleading' ad campaign

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Australian Broker | 20 Aug 2013, 06:00 AM Agree 0
An Australian credit union has agreed to honour discounted home loan rates after an ASIC investigation deemed their advertisements 'misleading'
  • not so old broker | 20 Aug 2013, 09:15 AM Agree 0
    Very interesting - so if CBA or NAB decide to advertise a rate of 1% then CUA must offer 0% (it's not below 0%!). But neither the CBA nor NAB is required to actually have anyone on a 1% loan, just to advertise it. I'd suspect there would be loan eligibility criteria that no-one could meet to get that rate.
    Were I a cynic I might postulate an advertisement from one of the Big 4 which would see the demise of the CUA. Very bad drafting of an UEnforceable Undertaking by ASIC if you reporter has quoted it correctly. I shall await the outcome with some interest. times.
  • Brian Broker | 20 Aug 2013, 09:46 AM Agree 0
    To "not so old broker" - the discount is on the average of all 4 major banks, not just one bank. For your scenario to work all 4 majors would need to advertise a variable rate of 1% or less. If they tried that, the next ASIC action would be against the 4 majors.
  • not so old broker | 20 Aug 2013, 10:28 AM Agree 0
    Hi Brian - the EU actually refers to the 'average of the four', so only one of the four has to change its advertised variable rate to change the quantum of the (simple) average, thus triggering my scenario. Also it is not ASIC that would pursue the banks, it is not their jurisdiction, that distinction belongs to the ACCC regarding pricing collusion. But all of them could change their pricing in isolation for the reasons I mentioned and not trigger a prosecution from ACCC, and have the same result, ie no more little competitor(s).
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