The Australian Securities and Investments Commission (ASIC) has acted to protect consumers in the financial services industry, and ensure that claims by mortgage brokers in advertising material are factually correct, by accepting an enforceable undertaking from Mortgage Point Pty Ltd (Mortgage Point).

ASIC was concerned that since October 2001, Mortgage Point, a Melbourne-based mortgage orginator, made potentially misleading and deceptive statements in its promotional brochures.

‘This case highlights the need for anyone operating in the financial services industry, including mortgage brokers, to ensure that all claims in advertising material are accurate,’ ASIC Executive Director of Consumer Protection, Mr Greg Tanzer said.

‘ASIC will continue to work with industry participants, as well as the Mortgage Industry Association of Australia to improve standards in this area.

‘This case also shows that claims of being ‘unbiased’ or providing ‘independent advice’ or ‘unbiased advice’ must be strictly correct or adequately qualified, if brokers are to avoid liability for misleading and deceptive conduct,’ added Mr Tanzer.

The advertisements

Since October 2001, Mortgage Point published various brochures in which it claimed to offer ‘independent’, ‘impartial’ and ‘unbiased’ advice about mortgages.

The brochures stated that Mortgage Point:

• offers an impartial and unbiased loan advisory service;
• gives free unbiased advice;
• acts as an independent mortgage broker; and
• provides independent advice.

ASIC formed the view that the claims were misleading and deceptive because Mortgage Point and its agents:

• only receive commission from, and provide advice in relation to lenders on its panel; and
• do not provide advice in relation to lenders who are not on its panel.

The enforceable undertaking

As part of the enforceable undertaking, which is provided under the consumer protection provisions of the ASIC Act, Mortgage Point has given an undertaking that:

• it will not make any of the above claims or use the words ‘unbiased’, ‘impartial’ or ‘independent’ in any future advertising or promotional material;
• it will provide compensation to any customer who has suffered loss as a result of relying on the claims Mortgage Point is ‘unbiased’, ‘impartial’ or ‘independent’;
• it will implement a compliance program; and
• it will make a financial contribution towards consumer education or similar programs.

Background

Mortgage Point is a mortgage-broking firm based in South Yarra, Victoria. It conducts a business under which its independent agents operate outlets providing loan and mortgage services to the public. The services include recommending and sourcing possible loans for borrowers.

Mortgage Point has a panel of lenders from which its agents recommend potential loans. There are a number of lenders who are not on the panel.

ASIC acknowledges Mortgage Point’s cooperation during the investigation of this matter.

A copy of the enforceable undertaking can be obtained from ASIC’s Enforceable Undertakings Register.