Australia’s largest home loan mortgage broker, Aussie Home Loans, has been taken to the Australian Securities and Investments Commission (ASIC) over apparently misleading advertising.
Consumer advocacy group Choice is leading the complaint arguing that Aussie’s $25 million advertising campaign that ran on TV and in-store between 2016 and 2018 didn’t tell consumers the full picture.
As reported on The Sydney Morning Herald over the weekend, Aussie’s advertising inferred its service was free and it worked independently from the banks to ensure customers got the best deals.
But, according to Choice, Aussie Home Loans is receiving a commission of 16 basis points per year for its services and “providing people with riskier loans that take longer to repay”.
Aussie is 50 per cent owned by the Commonwealth Bank, a fact it rarely discloses.
Choice alleges that 40 per cent of all Aussie customers end up with a CBA home loan and that’s despite Aussie saying it offers a choice of over 3000-plus different loan options.
In its complaint to ASIC, Choice noted: “Advertising claims by Aussie Home Loans [state] they will find people a ‘perfect loan’, ‘a better deal’ or even a ‘good’ quality loan.
“Choice is concerned that consumers who have seen these ads are likely to have formed the incorrect impression that mortgage brokers will scan the market to find them a high-quality loan, when the industry has failed to achieve this.”
Mortgage brokers were particularly savaged at the Hayne Royal Commission into the financial services sector this year with allegations brokers would favour institutions that paid the highest commissions. There were also claims that brokers didn’t get all the required documentation to get a loan across the line.
ASIC’s own research also found that brokers didn’t offer cheaper home loans than borrowers could had they approached the financial institution themselves.