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04-256 ASIC crackdown against misleading mortgage broker advertising continues
The Australian Securities and Investments Commission (ASIC) today issued a warning to the mortgage broking industry regarding misleading advertising.
‘Don’t claim that you are independent or impartial if that’s not true’, Mr Greg Tanzer, ASIC’s Executive Director of Consumer Protection and International said.
‘In every case that we have examined to date, we found such claims were misleading. For example, you cannot be totally impartial if you only deal with a limited panel of lenders who are paying you commission’, Mr Tanzer said.
‘The message to consumers is to shop around for home loans. See what kind of loans are available and get an idea of current rates. That way, if you use a mortgage broker, you can check if you are getting the best deal’, Mr Tanzer said.
Mr Tanzer issued the warning after ASIC accepted an enforceable undertaking from Structured Financial Solutions Pty Ltd in relation to claims which ASIC found to be misleading and deceptive.
Between 1 June 2003 and 10 February 2004, Structured Financial Solutions published various advertisements and brochures in which it claimed to offer ‘independent’ and ‘impartial’ advice about mortgages.
ASIC considered the claims misleading and deceptive because Structured Financial Solutions advises consumers only about the lenders appointed to its panel. All of the lenders on the panel pay commission to Structured Financial Solutions.
As a result of ASIC’s concerns, Structured Financial Solutions has given an undertaking that:
- Structured Financial Solutions will not make any of the above claims or use the words ‘impartial’ or ‘independent’ in any future advertising or promotional material;
- Structured Financial Solutions will provide compensation to any customer who has suffered loss as a result of relying on the claims Structured Financial Solutions is ‘impartial’ or ‘independent’;
- Structured Financial Solutions will implement a compliance program and complaints handling system; and
- Structured Financial Solutions will make a financial contribution towards consumer education or similar programs.
‘This case highlights the need for all mortgage brokers to make sure that what they claim in advertising and promotional material is completely accurate and correct. ASIC will insist that anybody claiming to offer ‘independent’ or ‘impartial’ advice must be able to show the claim to be strictly correct’, Mr Tanzer said.
‘ASIC will continue to work with the industry including the Mortgage Industry Association of Australia, to improve standards in this area’, Mr. Tanzer added.
ASIC’s consumer website FIDO at www.fido.asic.gov.au offers tips on how to make the best use of mortgage brokers.
End of release