The Abacus advertising campaign included representations, by way of a comparison with major banks, about home loan savings that could be achieved with a credit union or building society.

ASIC Commissioner Dr Peter Boxall said ASIC was particularly concerned about how the comparison was presented.

‘ASIC raised with Abacus that they may not have clearly and prominently disclosed the types of interest rates and the selected number of credit unions and building societies used in the comparison.

‘We were also concerned that the comparison may not have used an appropriate point-in-time selection to calculate savings, and that consumers were not warned that any savings may be affected by future changes in interest rates,’ Dr Boxall said.

While Abacus maintain that the advertisements in their original form were not misleading, they agreed that in future advertisements they would clearly disclose the types of rates used in any comparison and the selective nature of any comparison. Where a claim is made about future savings, Abacus will disclose the fact that interest rates will change in the future, and that any potential savings may be affected by such change.

Abacus will also ensure that any comparisons have a reasonable basis, including the appropriate selection of points in time – and the use of reasonable assumptions – when calculating example savings.

ASIC acknowledges Abacus’ cooperative approach responding to ASIC’s concerns.

Background

Abacus is the industry body representing the Australian mutual sector, comprising credit unions, mutual building societies and friendly societies.

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