Macquarie Bank has admitted to failures in the promotion of its “welcome” interest rate for new savings account customers.
The bank has admitted to breaching the Corporations Act and could face a $14 million penalty, in proceedings brought by ASIC.
Macquarie described the interest rate as a “welcome variable rate” and a “bonus”, which ASIC alleges could have led customers to believe it was paid on top of the standard variable rate.
In fact, the Welcome Rate generally operated as a fixed rate that applied instead of, rather than in addition to, the standard rate during the four-month promotional period, the regulator said.
The penalty, which the parties have jointly proposed to the NSW Supreme Court, comes in addition to $8.8 million in remediation initiated by Macquarie which has already been paid to nearly 40,000 customers.
Macquarie Bank said it would not contest the ASIC proceeding and is expected to pay a $14 million civil penalty.
It said the ASIC announcement related to products offered on its website between December 2021 and September 2022.
It said it would admit to a contravention of its obligation to ensure it provided financial services efficiently, honestly and fairly.
“Macquarie’s website offered a Welcome Rate on its Macquarie Savings Account,” the bank said in a statement.
“The matter arose because, when standard variable rates increased and exceeded the Welcome Rate, customers were instead paid the higher standard variable rate though some expected a bonus margin over that rate.
“Macquarie acknowledges that some of the wording on its website was not sufficiently clear and may have caused confusion.”
Australians with $1.8 trillion in deposits being urged to check rates
ASIC commissioner Alan Kirkland said Australians had almost $1.8 trillion in household deposits, but the conditions attached to higher savings rates could be difficult to understand.
He urged consumers to check they were receiving the rate they had been promised by their bank.
Alan Kirkland is urging Australians to check the savings rates on their bank deposits. (ABC)
“Higher advertised rates may only apply for a limited time or may depend on the customer meeting certain conditions,” Mr Kirkland said.
“Consumers should check what conditions apply, whether they are meeting them and whether their bank is paying the interest rate they have been promised.”
He said in the case of Macquarie: “This wasn’t just unclear wording.
“Macquarie’s systems and controls were not rigorous enough to identify the risk that customers would misunderstand how the Welcome Rate worked,” he said.
“At a time when Australians are contending with cost-of-living pressures, consumers deserve clear information about savings rates and the financial benefits they are promised.”
Macquarie apologises for ‘confusion caused’
Macquarie’s head of banking and financial services Ben Perham said the bank’s customers had high expectations of it, “and although ASIC has acknowledged our actions were not deliberate, we should have better explained on our website how the Welcome Rate would be applied and we apologise for any confusion caused.
“We received some customer complaints regarding the description of the Welcome Rate on our website, and we elected to pay $8.8 million in compensation to put customers in the position that they would have been if the Welcome Rate was a fixed bonus interest margin,” Mr Perham said.
“Additionally, we have conducted a thorough review of all product descriptions we use across our website.”
The ASIC case and proposed penalty is subject to the court’s approval.
Source: www.abc.net.au
