North Coast financial institution fined $50,000
THE Australian Securities and Investment Commission has issued four infringement notices to Bananacoast Community Credit Union Pty Ltd (bcu) totalling $50,400 for potentially misleading statements in online advertisements.
On top of the fines, ASIC ordered bcu to offer remediation to affected customers.
The advertisements, which ran last year, offered a special interest rate for home loans and personal loans but did not clearly or prominently disclose the consumer was required to pay for consumer credit insurance (CCI) for five years to receive the advertised lower interest rate.
Some advertisements included a fine-print disclaimer while others did not display any further information.
bcu today responded to the action issuing a media statement.
"Previously, bcu promoted a product where members could access a competitive variable loan rate when bundled with consumer credit insurance (CCI) for five years," the financial institution said in a statement.
"Despite our thorough processes and the legal advice sought on this offering, it has now been determined by ASIC that some advertising used to communicate this product was potentially misleading and did not completely satisfy its requirements.
"bcu were quick to address these concerns by contacting the 22 impacted members to discuss their options and offer a refund of the premiums for members who had purchased CCI.
"We apologise for any confusion that this advertising may have caused our members and will continue to work closely with ASIC to ensure this does not happen again."
ASIC found the advertisements that did carry a disclaimer did not give suffient prominence to important conditions and did not adequately explain how some of the conditions operated.
ASIC considered that the 'click through' facility used on some websites, which provided additional information on other webpages, was not adequate to correct the misleading overall impression.
Deputy Chair Peter Kell said:, 'A promotional offer with conditions attached must not bury the conditions in fine print or elsewhere, particularly when the promotion involves a potentially poor value product such as CCI'.
In response to ASIC's enforcement action bcu has:
- Withdrawn the concerning advertising;
- Offered to cancel the CCI policies and refund the premiums to customers who purchased CCI;
- Refunded all premiums paid where the CCI policy had already been cancelled.
The total amount repaid to customers is $91,600 including interest.
bcu are also honouring the advertised loan interest rate(s) without the requirement for customers to purchase CCI.
bcu has paid the $50,400 penalty, ASIC advised.