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12-198MR GE Money changes personal loan online advertising
GE Money has changed its online advertising of personal loans and debt consolidation following ASIC concerns that the advertising was potentially misleading.
The advertisements stated that consumers could borrow 'from $3,000' with an interest rate 'from 13.99% p.a.' However, the fine print disclosed that only loans over $20,000 were eligible for an interest rate starting from 13.99% p.a. For loans of $3,000, interest rates started at 15.79%, and could be much higher.
ASIC was concerned that the advertising was potentially misleading because the claim in the body of the advertisement created the impression that an interest rate of 13.99% was potentially available on a $3,000 personal loan. The disclosure in the fine print was insufficiently prominent to qualify that impression.
ASIC Commissioner, Peter Kell, said ‘advertisements should give clear and accurate information to ensure the overall effect creates realistic expectations about the cost of a credit product.'
'ASIC was particularly concerned that the applicable rate for the minimum loan amount referred to in the advertisement could be much higher than the rate being promoted. Where there is reference to a minimum loan amount and an available interest rate, consumers are entitled to expect some correlation between the two,' said Mr Kell.
GE has subsequently changed the wording to more clearly disclose the applicable interest rate.
ASIC issued guidance to help promoters comply with their legal obligations when advertising financial products and services in February 2012 - Regulatory Guide 234 Advertising financial products and advice services: Good practice guidance (RG 234). ASIC recently consulted on more detailed guidance for credit - Consultation Paper 178 Advertising credit products and credit services: Additional good practice guidance (CP 178) - and we plan to release updated regulatory guidance in October 2012.