ASIC targets misleading Chinese language home loan advertising

An review by ASIC into advertising targeting Chinese speaking home buyers has prompted four mortgage broking firms to change their home loan advertising.

The mortgage broking firms which published the advertising are:

Ace Mortgage Market Pty Ltd (also known as 袁翹新會計師), located in Parramatta, NSW;

Aus Realty Group Pty Ltd (also known as 澳人信貸), located in Hurstville, NSW;

Apex Finance & Mortgage and its business owner (also known as 聯通信貸), located in Burwood, NSW; and

Trans Australia Mortgage Finance Pty Ltd (trading as Apple Home Loans, 全盛信), located in Burwood and Chatswood, NSW.

The range of concerns contained in the advertisements targeting Chinese speaking home buyers included:

• representations in Chinese such as 'lowest fixed rate' and 'no proof of income' – which may be false and misleading statements, or indicate a breach of the responsible lending obligations,
• heavy reliance  on disclaimers (such as 'terms and conditions apply') that did not explain qualifying terms and conditions in the same advertising. Also, promoters tended to advertise benefits in Chinese language, but stated the disclaimers and qualifications in English, when the advertising was aimed at non-English speaking consumers,
• failure to disclose the required comparison rate when quoting an annual percentage interest rate,
• failure to  disclose the required warning about the accuracy of the comparison rates, and
• failure by their promoters to regularly review the advertisements  to ensure accuracy and compliance with the law.

ASIC Deputy Chair Peter Kell said the Australian Consumer Law applies to all advertising, including advertising in foreign languages.

"Consumers who are unable to understand written English are likely to be more reliant on advertising in their native language when in need of a financial product," he said.

"Promoters should ensure that their advertising is up to date and complies with the law. If the majority of the advertising is in a foreign language, the warnings, disclaimers or qualifications should be prominently disclosed in the same advertising and explained in that same language.

"ASIC will continue to monitor all forms of advertising, including advertising targeted at non-English speaking consumers', Mr Kell said.

To assist consumers from a non-English speaking background, a range of publications, including the Home Loans credit factsheet, are available in 26 different languages on the MoneySmart website.

Background 

As part of the review,  ASIC took action against four entities about their advertising, as follows.

Ace Mortgage Market Pty Ltd (also known as 袁翹新會計師) claimed that a person could apply for a low doc loan without proof of income. This advertising was drafted prior to the responsible lending obligations introduced in the National Consumer Credit Protection Act 2009, but Ace Mortgage continued to use the same advertising in its 2016 campaign. ASIC was concerned about potential breaches of the responsible lending obligations and possible false and misleading statements.

Following ASIC's concerns, Ace Mortgage has agreed to remove its advertising.

Aus Realty Group Pty Ltd (also known as 澳人信貸) claimed its 4.14%* as "Australia lowest fixed rate". This advertising was potentially misleading as ASIC had seen examples on the market at the time the advertisements were published where lenders were offering a fixed rate lower than 4.14%. The 4.14% interest rate was followed by an * and a statement, *Terms and Conditions Apply. The advertisement did not explain the relevant terms and conditions. The advertisement also included other potentially misleading representations including "guarantee to get the lowest mortgage interest rate for clients*, biggest credit centre in the South (Sydney) and biggest cash rebates."  The advertisement contained comparison rates; however, they were in small font and not prominently disclosed. 

Following ASIC's concerns, Aus Realty agreed to amend its advertising.

Apex Finance & Mortgage and its business owner (also known as 聯通信貸) claimed that its 4.99%* is the lowest fixed interest rate. The 4.99% rate was followed with a * and there was a statement that *Terms and Conditions Apply but the advertisement did not explain the relevant terms and conditions. The advertisement contained a comparison rate; however, the rate was in small font and was not accompanied by a warning about the accuracy of the comparison rate. The business owner is an authorised representative of Australian Finance Group Ltd, the holder of an Australian credit licence.

Following ASIC's concerns, the business owner agreed to remove its advertising, and confirmed that their future advertising will be reviewed and approved by their licensee, Australian Finance Group Ltd. 

Trans Australia Mortgage Finance Pty Ltd (trading as Apple Home Loans, 全盛信貸) was promoting a 3.98% weekly recommended fixed interest rate, 4.13%* residential variable rate and 3.98%* residential fixed rate. However, Apple Home Loans failed to quote the relevant comparison rates and did not include warnings about comparison rates. Two of these rates were followed by a * but the Advertisement did not contain any relevant disclaimers and/or qualifications.

Following ASIC's concerns, Trans Australia agreed to amend its advertising.