In a settlement with the Commerce Commission, Kiwibank Limited has admitted that an advertising campaign it ran in September and October last year promoting 'cheaper home loans guaranteed' was liable to mislead consumers.
Contrary to its advertising, Kiwibank did not in fact guarantee 'cheaper' or 'the cheapest' home loans. Instead, it intended to match, rather than undercut, a competitor's rate if it were proven that over a six-year period, an equivalent product was cheaper.
The Commission also considered that Kiwibank's advertising was liable to mislead consumers into believing that Kiwibank would undercut loans made by any home loan lender. In fact, the offer only applied to equivalent home packages offered by banks with branches nationwide. This particular matter was drawn to the Commission's attention by a non-bank home loan lender.
Kiwibank has now amended its loans processes to ensure that it does in fact deliver on its promises. It has also amended its advertising to ensure that consumers understand that the offer only applies to equivalent home loan packages offered by banks with branches nationwide.
"This settlement is a very good outcome for the consumer", said Director of Fair Trading Deborah Battell. "If competition is to be effective, consumers need to be able to rely on the information provided by companies so that they can make an informed choice about which of the goods and services they will buy".
The advertising ran during September and October 2002 in newspapers and on television. The television commercial screened 94 times during this period.
Media contact: Deborah Battell, Director, Fair Trading Branch
Phone work (04) 924 3760, mobile 029 924 3760
Jackie Maitland, Communications Manager
Phone work (04) 924 3708, mobile 029 924 3708
Commission media releases can be viewed on its web site www.comcom.govt.nz
