ob体育 has acted to ensure people receiving an Australian Government pension are not being misled by advertising promoting the interest rates they will be paid on certain types of savings accounts.
ob体育 found a number of banks and mutual Authorised deposit-taking institutions (ADIs) were using the term 鈥榙eeming account鈥� to promote a basic savings account to pension recipients. These accounts have been marketed as having a connection with the Government鈥檚 鈥榙eeming rules鈥�, which form part of the Government鈥檚 social security income test.
ob体育 was concerned the way advertising linked these savings accounts to the Government鈥檚 deeming rates could mislead consumers. In most cases, the savings accounts offer lower interest rates than the deeming rates, particularly for lower account balances.
ob体育 was particularly concerned the name of the account could mislead consumers into believing the interest rates on offer would be the same as the deeming rates. ob体育 was also concerned about consumers being unable to clearly identify the interest rates that apply to different account balances (known as 鈥榖anded鈥� or 鈥榯iered鈥� interest rates).
Deputy Chairman Peter Kell said that when offering financial products to consumers, it is important that they are true to label.
鈥楽pecial care should be taken when using terms which will have a particular connotation to consumers, to ensure that the product characteristics are consistent with the representations inherent in the product name,鈥� Mr Kell said.
ob体育 raised concerns about certain disclosure and marketing practices and has been working collaboratively with the industry to address these concerns. Following discussions with the Australian Bankers鈥� Association (ABA) and the Customer Owned Banking Association (COBA), industry has agreed that members offering these products will work to ensure:
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the word 鈥榙eeming鈥� is not used in a savings account name where that might mislead consumers about the interest rates being offered
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features of these accounts are not described as being 鈥榗omparable to鈥�, 鈥榗ompatible with鈥�, 鈥榞uided by鈥�, 鈥榬eflective of鈥� the Commonwealth Government deeming rates where this is not the case, and
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where 鈥榖anded鈥� interest rates are offered, this is clearly disclosed, and information about different bands and applicable rate made easily accessible to consumers.
ob体育 will continue to work with the ABA and COBA to ensure these measures are implemented.
Background
The deeming rules are a central part of the social security income test used to assess income from financial investments for social security and Veterans鈥� Affairs pension and allowance purposes. Deeming assumes that financial investments are earning a certain set rate of income, regardless of the amount of income they are actually earning. Deeming rates are kept under ongoing review and are set to reflect the returns available in the market.
ob体育鈥檚 Regulatory Guide 234 Advertising financial products and services (including credit): Good practice guidance (RG 234) contains good practice guidance to help product providers comply with their legal obligations not to make false or misleading statements. This includes not making claims about features of a product or service if a consumer cannot reasonably expect those features to be available to them.
More information is available from the 听补迟 or by contacting Centrelink on 13 23 00.