22nd Question

Will the Royal Commission recommend to the Three Financial Regulators that they use their existing regulatory powers to ban Credit Card Issuers paying third party credit card websites not limited to the following to market/advertise/promote/recommend in any way, shape or form their Credit Card Products because such advertisements are often misleading and deceptive and targeted at Credit Cardholders with low Financial Literacy Capacity as classified/quantified by the Productivity Commission and the ABS in Chapter 1?

• www.finder.com.au/creditcards 

• www.creditcardcompare.com.au

• www.creditcard.com.au

• www.canstar.com.au/credit-cards

• www.mozo.com.au/credit-cards 

• www.infochoice.com.au/credit-cards

• www.ratecity.com.au/credit-cards

• www.iselect.com.au/credit-card

• www.infochoice.com.au/banking/credit-card

1.       On 25 Oct 2011, the Writer spoke to Ms. Sharon van Etten by 'phone at RBAInfo and then emailed her 'Subject: Seeking data on the percentage of credit card users who repay their outstanding indebtedness in a particular month, and a break-up of those who do not'.  Ms van Etten responded on Thurs, 10 Nov 2011 by providing useful summary information from Strategic Review of Innovation in the Payments System: Results of the Reserve Bank of Australia’s 2010 Consumer Payments Use Study - June 2011.

 On 8 Dec 2011 the Writer posted three CDs to Ms. Sharon van Etten at the RBA that opened at his letter to the RBA dated 8 Dec 2011 (Reference B listed at top of this page) titled:

 *           Request to the Reserve Bank of Australia, hereinafter the RBA, to implement the same "competitiveness and efficiency" that it has overseen in the 'wholesale supply side' of the debit and credit cards products to the Retail Supply Side of credit cards, because banks profits from credit cards are not derived from the User Pays Principle.

 *           All users should pay the cost of their credit card transactions, and not some "unlucky" users paying a disproportionate burden which has further gapped the "Haves" from the "Have Nots" 

 

 Below is an extract from Section 1 titled 'Summary of eight Attachments' of the Writer's letter to Ms. Sharon van Etten at the RBA dated 8 Dec 2011:

  "Attachment 'H' titled All Smoke and Mirrors provides an unfortunate testament of the prudential role performed by the Reserve Bank -

   (i)        entrusted to be banker and financial agent for the Commonwealth; and

   (ii)       with a charter to protect "....the economic prosperity and welfare of the people of Australia".

   if CreditCards.com (parent site of australia.creditcards.com) is being paid by some or all of Our Bank/Issuer Partners (ANZ, Aussie, Bank Mecu, Bankwest, citi, NAB, St George, Virgin, Westpac) for providing links to those banks' websites credit card products at , because some like NAB's Low Interest Credit Card, Bank mecu's Low Interest Rate Credit Card and Bankwest's Breeze MasterCard are patently deceptive.

          Hence, Attachment 'H' criticised the RBA for allowing www.australia.creditcards.com to advertise Credit Cards on behalf of Our Bank/Issuer Partners that included ANZ, citi, NAB, St George and Westpac. 

          A few months later www.australia.creditcards.com and www.creditcards.com ceased to display any advertising for Credit Cards offered in Australia.  There is another website, www.creditcard.com.au (without an 's' on creditcards) with a different logo.

2.        A Credit Card is a loan facility to borrow money, specifically it is a Line of Credit.  The only party that should make representations about the respective benefits, or costs, of a Credit Card, which is a 'borrowing instrument' available to Australian's with poor Financial Literacy Capacity, should be the Credit Card Issuer. 

          Removing the above 'web platform sellers' would -

          (i)         lower the delivery costs of Credit Card Issuers;

          (ii)        reduce the unhelpful differentiation/complexity of Credit Card Products; and

          (iii)       avoid a lot of misinformation and deception. 

          Due to the internet, together with more traditional media (newspapers, radio and TV), there are ample media options available to Credit Card Issuers to exclusively advertise their own Credit Card Products.