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Wednesday 17 September 2014

14-236MR Westpac pays $20,400 penalty for misleading statements

Westpac Banking Corporation (Westpac) has paid $20,400 in penalties after ASIC issued two infringement notices for potentially misleading statements contained in a Product Disclosure Statement (PDS) and other promotional material.

Each infringement notice imposed a penalty of $10,200.

The statements were made from July 2013 to May 2014 and related to the investment returns on the Westpac Annuity Deposit, a product offered to retail investors planning for retirement.

ASIC was concerned that Westpac potentially misled consumers by representing that the interest rate – known as the 'earnings rate' – was calculated on the principal amount invested. In reality, the rate only applied to the balance of the principal which could reduce throughout the term of the investment. The representations appeared in:

  • the PDS dated 1 July 2013
  • the booklets titled ‘Westpac Annuity Deposit Investor Guide/FAQ’ and ‘Build a brighter future with Westpac Retirement Deposits’, both dated 1 July 2013,
  • and a webpage titled, ‘Westpac Annuity Deposits’.

Deputy Chairman Peter Kell said, 'ASIC will act to ensure firms provide clear and accurate information to consumers about their financial products'.

Westpac has issued a new PDS and promotional materials following ASIC's concerns.

The payment of an infringement notice is not an admission of a contravention of the Australian Securities and Investment Commission Act 2001 consumer protection provisions. ASIC can issue an infringement notice where it has reasonable grounds to believe a person has contravened certain consumer protection laws.

Download the infringement notices

Background

In 2014, ASIC has taken action against 11 entities, including Westpac, for potentially misleading advertising or potentially misleading statements made in other promotional material:

  • NAB pays $40,800 penalty for misleading UBank advertisements (refer: 14-235MR)
  • Make it Mine Finance Pty Ltd pays $20,400 penalty for misleading advertising (refer: 14-198MR)
  • Esuperfund Pty Ltd pays $30,600 penalty for misleading advertising (refer:14-196MR)
  • Your Super Accountant pays infringement notice in relation to ‘FREE’ SMSF set up claims (refer: 14-195MR)
  • Virgin Money pays $30,600 penalty for misleading advertising (refer: 14-091MR)
  • Wealth Within Ltd pays $20,400 in penalties over misleading advertising (refer: 14-075MR)
  • Small amount lender pays $30,600 penalty for misleading online advertisements (refer: 14-065MR)
  • SuperHelp Australia Pty Ltd pays infringement notice in relation to FREE SMSF fund setup claims (refer: 14-051MR)
  • Finance broker pays $20,400 infringement notice penalty (refer: 14-022MR)
  • Media Super pays infringement notice in relation to superannuation advertising (refer: 14-001MR).   
Last updated: 23/03/2016 03:14