ASIC acts against Mortgage Choice

ASIC has announced that it has accepted an Enforceable Undertaking from Mortgage Choice Limited in relation to some claims made in its advertising and promotional material that its advice was 'unbiased'.

Since October 2002, Mortgage Choice has published material in which it made claims that:

Mortgage Choice is 'totally unbiased';
Mortgage Choice provides 'unbiased home loan advice'; and
Mortgage Choice consultants are 'paid the same regardless of which lender or loan you choose'.

ASIC formed the view that the claims were misleading and deceptive given that Mortgage Choice and its franchisees only receive commission from, and provide advice in relation to lenders on its panel, and do not receive commission from, or provide advice in relation to lenders who are not on the panel.

In addition, Mortgage Choice published a 'Customer Charter' which contained the statement, 'Our lender panel is reviewed from time to time to ensure that we have a cross-section of lenders who can offer what we consider to be the best choice of home loans'.

ASIC was concerned that the statement in the Customer Charter was misleading because the selection of members to the panel depended, amongst other things, on the lenders willingness to pay commission and make other payments to Mortgage Choice.

As a result of ASIC's concerns, Mortgage Choice has given an undertaking that:

Mortgage Choice and its franchisees will not make any of the above claims or use the word 'unbiased' in any future advertising or promotional material without including a statement that clearly qualifies that the advice is limited to the 27 lenders from whom it receives commission and other payments;

Mortgage Choice will remove the statement relating to the appointment of lenders to its panel from the Customer Charter;
Mortgage Choice will place corrective advertisements in national and local newspapers; and

Mortgage Choice will provide compensation to any customer who has suffered loss by reason of reliance on the claims that it is unbiased, or that its consultants are paid the same regardless of which lender or loan is chosen.

Mortgage Choice has separately advised ASIC that it intends to discontinue using the word 'unbiased' in all promotional material.

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Gilshenan & Luton is moving

From 24 May, Gilshenan & Luton will be located at

Level 13
259 Queen Street
Brisbane Q 4001.

Phone and fax numbers remain unchanged.

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Financial System Levies

The Minister for Revenue and Assistant Treasurer, Senator Helen Coonan, has released the Report of the Review of Financial System Levies.

The Review examines the framework for collecting levies from the financial services sector to fund the prudential regulation undertaken by APRA, ASIC and the ATO.

After reviewing the report, the Government has accepted the recommendations of the review subject to the changes in the framework not resulting in increases in the amounts paid by the smallest financial institutions.

She said “The Government ... recognises that small financial institutions play an important role in terms of alternate service provision. Competition and choice for consumers and should not be disadvantaged by significant increases in their levies.”

“The most substantial change to existing arrangements will be the separation of the levies into two components, the first of which would continue to be based on cost of supervision and the second on system impact and vertical equity.

The Government intends the new levy arrangements to take effect in time to be implemented for the 2005-06 financial sector levies after appropriate further consultation with industry on the detail of these new arrangements. This consultation will commence following the determination of the 2004-05 financial sector levies, which will be set under the existing legislative framework for the levies.

The next review of the levy-setting arrangements is scheduled to take place during 2008.

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Privacy Amendment Act 2004

The Commonwealth Privacy Act has been amended effective 21 April 2004.

While the amendments are not major, amongst other things, they do:

1. extend the application of National Privacy Principle 9 (“Transborder data flows”) to personal information about persons who are not Australian residents or citizens;

2. enable the Privacy Commissioner to investigate breaches of correction rights relating to persons who are not Australian residents or citizens.

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2004 Financial Services Forum

The Program and Registration Form for our conference on 17-18 June at Coogee in Sydney are now available.

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