REGULATORY GUIDE 234

The ASIC publication titled "Advertising financial products and services (including credit): Good practice guidance" dated Nov 2012 contains the following 'guidance' re credit cards under 'B Good practice guidance' from page 11:

RG 234.36 If a product offers certain benefits that are mutually exclusive (i.e. they cannot be taken up simultaneously), this should be made clear in the advertisement.

Example 9: Mutually exclusive benefits

While an introductory offer for a credit card might offer both a low interest rate for six months on a balance transfer and an interest-free period on purchases, if those benefits are not available concurrently, this should be made clear in any advertising that refers to both. - Page 13

RG 234.39 Where a product is advertised on the basis of a particular feature or benefit, that feature or benefit should remain available for a reasonable period, given the nature of the market and the nature of the advertisement: s12DG, ASIC Act.

Example 11: Bait advertising

A credit card was widely advertised as having a ‘low ongoing rate’ of 9.99% per year, while warning consumers about the short-term nature of offers made by some competitors.

ASIC raised concerns with the company promoting the card when, two months later, they introduced a higher interest rate (of 13.99% per year) for cash advances. We were concerned that consumers who responded to the earlier advertising may not have had the benefit of the credit card at the advertised price for a sufficient period of time.

RG 234.54 Where a fee or cost is referred to in an advertisement, it should give a realistic impression of the overall level of fees and costs a consumer is likely to pay. When a headline claim about a fee or cost is used in an advertisement, any exclusions or qualifications should be contained within the headline claim or be clearly and prominently noted within the advertisement.

Example 23: Waived fees

There is an important distinction between the absence of a fee, and a fee that exists but is not charged in certain circumstances. A promoter should not make a claim of ‘no fees’ (including ‘$0’ or ‘fee-free’) where fees apply to the product but are waived if the consumer meets certain qualifying criteria.

Example 25: Omission of details about a novel feature

Advertisements for a credit card promoted a single annual percentage rate. In fact, while that rate applied for purchases, a different and higher rate applied to cash advances. At the time, differential pricing based on the type of transaction was relatively new for credit cards, and in that context, ASIC was particularly concerned that the advertisements failed to refer to the multiple rates.

RG 234.55 An advertisement should not state that there is only one fee if there are other costs associated with the product that consumers will incur. Promoters should not assume that clients will understand the distinction between ‘fees’ and ‘costs’. If an advertisement refers to the fees that apply, it will generally need to positively state whether or not other costs apply.

Example 27: Omission of applicable fees

Advertising material for a credit card claimed that the card had no annual fee and ‘that means it costs you nothing to have it’. In fact, new cardholders would incur a $25 establishment fee. ASIC contacted the organisation promoting the credit card and they agreed to refund the $25 fee to approximately 2,500 customers.

RG 234.63 The advertisement should also describe what the interest rate or fees revert to (e.g. the standard variable rate), but this need not be stated with equal prominence to the discount rate or fees. The degree of prominence required depends on any unusual features of the discount rate or period. For example, we would expect the following reversion rates to be stated more prominently:

(b) if the advertisement is for a discount interest rate for a balance transfer on a credit card and the reversion rate is the higher cash advance interest rate rather than the standard purchase interest rate.

RG 234.119 Promoters should take into account any key disclosures in the corresponding disclosure document. This is particularly the case where disclosures are prescribed or required: see RG 234.14.

Example 48: Terms of credit card contract

Where the contract for a credit card includes a standard clause allowing the credit card provider to unilaterally raise the interest rate at any time, the promotional campaign for the card should not contain a ‘guarantee’ that the interest rate will stay low.