Source: Money Management: 16 Jan 2012
The Commonwealth Bank of Australia has agreed to change some of its advertised loan comparison rates after concerns were raised by the Australian Securities and Investments Commission (ASIC).
ASIC was concerned that the Commonwealth Bank's advertised comparison rates for its Wealth Package loans were incorrect and potentially misleading because they did not include the Wealth Package $350 annual fee in the advertised comparison rate.
Under the National Credit Code, credit ads that include an annual percentage rate must also include a comparison rate incorporating the fees, charges and interest relating to a loan in order to better reflect the true cost of credit, ASIC stated.
When promoting a package loan, any fee in connection with a loan to qualify for the advertised annual percentage rate must be included in the comparison rate, otherwise that rate will not reflect the loan's true cost, ASIC stated.
"Comparison rates help consumers work out the true cost of credit. It can be difficult for people to compare home loans with different combinations of interest rates and fees," said ASIC Commissioner Peter Kell.
"This is why credit providers must include the comparison rate when they advertise a rate or a weekly payment for a home loan, and ASIC will be active to ensure compliance in this area," he said.
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