ASB Bank settles with Commission – changes advertising
Published16 Jul 1996
As part of a settlement with the Commerce Commission, ASB Bank Ltd has changed its mortgage advertising.
Commission Deputy Chairman Peter Allport said the Commission's view was that ASB Home Loan advertisements could have been misleading and risked breaching the Fair Trading Act. The advertisements were published nationally in newspapers towards the end of last year.
"The problem was one that is proving all too common in advertising," Mr Allport said. "Important conditions were left out of the ads.
"Advertising by banks is a particular concern, and we will continue to monitor their ads closely.
"Our concern is that customers must be given accurate information for healthy competition to develop. Their buying decisions are a major factor in competition. If they are not based on accurate information, then customers lose out, competitors are unfairly disadvantaged and competition is distorted.
"It is not acceptable to wait until customers have come in the door and want to do business, before telling them about terms and conditions.
"Once people have gone to a business they are more likely to buy - that is a legitimate aim of advertising. But there is a problem if customers are enticed by false or misleading ads.
"All important terms and conditions must be accurately and clearly included in the advertising, and they must not contradict or significantly change the impression created by the large text, pictures, colour and any other elements used in the ads."
The ASB advertisements offered a range of fixed interest rates and a variable rate.
They did not state that the interest rates would be higher if customers did not also buy ASB insurance. Nor did they state that the rates would be higher if customers did not pay an additional 1 percent of their mortgage as a processing fee.
"Our view was that the extra costs would have had a significant impact on customers' buying decisions - if they had been fully disclosed in the advertising some may have been unlikely to go to the bank," Mr Allport said.
When they met with the Commission, the bank's management was willing to comply with any recommendations to ensure the advertising complied with the Act.
ASB has undertaken to:
· ensure all its advertising and marketing material clearly and accurately describe any additional costs
· review its Fair Trading Act compliance programme
· report to the Commission on the changes made to the programme
