Financial regulators letting consumers down
Financial regulators are failing Australian consumers by not clamping down on confusing and misleading adverting campaigns, People’s Choice Credit Union managing director, Peter Evers believes.
Evers criticism of the regulators came after the publication of survey results showing the majority of Australians believed bank advertisements were unclear and “actively misleading”.
The research by the Ehrenberg-Bass Marketing Institute, on behalf of People’s Choice Credit Union, found that only one-in-three people thought bank advertisements were honest, with just over a quarter of respondents saying they were clear.
“The financial regulators have laid down the rules which say we have to advertise this way, but it’s not delivering, it’s not giving people what they need, so we have to think again,” Evers said.
“Regulation is meant to protect consumers, but right now it’s letting them down.
“Change is needed to ensure advertising is clear for two vital reasons: so consumers can understand what’s the best deal, and so lenders will be under more pressure to provide it.”
The survey highlighted consumers’ confusion, with only 12.6 per cent of participants being able to correctly identify the best deal when shown three pairs of ads for mortgages, with each showing a 'nominal’ interest rate and a 'comparison’ interest rate.
“When barely one-in-10 ordinary Australians can correctly understand the core information that’s contained in every home loan advert, then something is clearly wrong,” Evers said.
“How can people get the best deal? How can competition between financial institutions be effective if people don’t understand what’s on offer?”
“We need a banking system where consumers are informed and confident and don’t have to wade through the fine print to determine the best deal.”
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