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BFCSA: ASIC has whacked CUA over the knuckles. What about the Major Banks and the Honeymoon rorts?

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ASIC IS HAVING A GO AT LAST:  Its has rapped Credit Union Australia over the knuckles re misleading ads.  Did ASIC even think to remedy this conduct by telling the borrowers who have been shafted that they can now extinguish the mortgages if they wish to?  I doubt it.  Wait for all the other tricks in these contracts.   So Lenders will continue to mislead consumers as its a very very lucrative market in the Low Doc Toxic Loans Industry.  Our members KNOW the Major Banks have all been using misleading material to rope customers into borrowing money they cannot afford and using "honeymoon" clauses which are hidden from view.  

Consumers are not told to "take the blank contract home with you and get an independent lawyer to look for the "honeymoon trick" clause."

As Peter Kell says: "he has been monitoring this "trend" for years.  We know Pete..........................................there is a trail of victims yet you misled Parliament last year and said there are "only 17 complaints" and "no systemic issues."  Now in this article you admit its been going on for years!  The Senators would be very interested to hear what your latest version is in October Inquiry into ASIC.

ASIC has continued to have, for over a decade, a A LAZY LAZY POLICY OF MONITORING.  I remember telling Parliament 2003, ASIC just keeps telling consumers "we are monitoring."  Consumers are sick of the monitoring Pete.........................................What about all the Misleading and Deceptive Conduct by the Major Banks in the Low Doc Scandal?  What about those consumers?

Then you do an EU  Enforceable Undertaking - that's where CUA sign an insipid document known as an EU where ASIC says "we forgive you....stand in the naughty corner whilst we tell the industry news that you have been warned and we will take no action......... and we will not contact your bereaved customers......"  EU's are supposed to be for misdemeanors.   I would not be calling the misleading of consumers that a low interest rate implies for the life of the loan when in fact its a honeymoon period.....................................  So is ASIC now monitoring all the consumers to make sure CUA honour the promise?  Well it never did for the Henry Kaye and neither for the Fincorp victims.  Both signed an EU and failed to honour the promises.

This is from Broker News:

Credit union honours discounted rates after 'misleading' ad campaign

by AB | 20 Aug 2013

Credit Union Australia Limited (CUA) has agreed to maintain interest rate discounts for eligible home loan customers after an ASIC investigation raised concerns that the credit union's advertising was misleading.

ASIC's investigation focused on advertisements for CUA's 'Rate Breaker' home loan package, which featured on television, in cinemas, the CUA website and on public transport in Sydney, Brisbane and Melbourne.

The Rate Breaker advertisements highlighted a 1% discount off the average standard variable interest rates advertised by the 'big four' banks.

ASIC's view was that the ads gave the impression that the discount applied to the life of any loan under the 'Rate Breaker Package' banner. This was not the case. Rather, the terms and conditions of the Package enabled CUA to change the 1% discount at any time and stipulated that the interest rate could not fall below a minimum rate of 3%p/a.

The terms and conditions either didn’t feature in the advertisements or, where they did feature, they were not sufficiently displayed.

CUA had issued 2,083 Rate Breaker Package loans as of July 23, 2013.

ASIC deputy chairman, Peter Kell, says taking out a home loan is one of the biggest commitments a person or family could make and that consumers should be able to trust the information provided in the marketing of home loans.

“ASIC expects that financial services firms will provide clear and accurate information to consumers in their advertising and we will act when those expectations are not met,” says Kell.

CUA has also entered into an enforceable undertaking (EU) with ASIC as a result of its investigation. The EU includes requirements that CUA will:

  • Ensure that all consumers who entered into a Rate Breaker Package loan up to August 31 2013 will, for the duration of their loans, receive a discount of no less than 1% off the average of the variable interest rates advertised by the big four banks, except were it to be less than 0%;
  • Sufficiently highlight both the 3% per annum minimum interest rate and its ability to change the 1% discount rate in all future advertising of the Rate Breaker Package; and
  • Notify existing Rate Breaker Package customers of its undertaking to honour the 1% interest rate discount by September 30, 2013.

ASIC accepted the undertakings offered by CUA as an alternative to seeking court orders under section 12GNB of the ASIC Act. This approach means the discount applicable to loans taken out by borrowers under the Rate Breaker Package would not fall below the advertised 1% discount.

ASIC has been active in monitoring misleading or deceptive advertising across a range of industries over the past few years.

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