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Thursday 5 December 2013

13-325MR ASIC acts on advertising of pensioner deeming accounts

ASIC has acted to ensure people receiving an Australian Government pension are not being misled by advertising promoting the interest rates they will be paid on certain types of savings accounts.

ASIC found a number of banks and mutual Authorised deposit-taking institutions (ADIs) were using the term ‘deeming account’ to promote a basic savings account to pension recipients. These accounts have been marketed as having a connection with the Government’s ‘deeming rules’, which form part of the Government’s social security income test.

ASIC was concerned the way advertising linked these savings accounts to the Government’s deeming rates could mislead consumers. In most cases, the savings accounts offer lower interest rates than the deeming rates, particularly for lower account balances.

ASIC was particularly concerned the name of the account could mislead consumers into believing the interest rates on offer would be the same as the deeming rates. ASIC was also concerned about consumers being unable to clearly identify the interest rates that apply to different account balances (known as ‘banded’ or ‘tiered’ interest rates).

Deputy Chairman Peter Kell said that when offering financial products to consumers, it is important that they are true to label.

‘Special care should be taken when using terms which will have a particular connotation to consumers, to ensure that the product characteristics are consistent with the representations inherent in the product name,’ Mr Kell said.

ASIC raised concerns about certain disclosure and marketing practices and has been working collaboratively with the industry to address these concerns. Following discussions with the Australian Bankers’ Association (ABA) and the Customer Owned Banking Association (COBA), industry has agreed that members offering these products will work to ensure:

  • the word ‘deeming’ is not used in a savings account name where that might mislead consumers about the interest rates being offered

  • features of these accounts are not described as being ‘comparable to’, ‘compatible with’, ‘guided by’, ‘reflective of’ the Commonwealth Government deeming rates where this is not the case, and

  • where ‘banded’ interest rates are offered, this is clearly disclosed, and information about different bands and applicable rate made easily accessible to consumers.

ASIC will continue to work with the ABA and COBA to ensure these measures are implemented.


The deeming rules are a central part of the social security income test used to assess income from financial investments for social security and Veterans’ Affairs pension and allowance purposes. Deeming assumes that financial investments are earning a certain set rate of income, regardless of the amount of income they are actually earning. Deeming rates are kept under ongoing review and are set to reflect the returns available in the market.

ASIC’s Regulatory Guide 234 Advertising financial products and services (including credit): Good practice guidance (RG 234) contains good practice guidance to help product providers comply with their legal obligations not to make false or misleading statements. This includes not making claims about features of a product or service if a consumer cannot reasonably expect those features to be available to them.

More information is available from the Department of Social Services website at or by contacting Centrelink on 13 23 00.

Last updated: 05/12/2013 12:00