Wizard Mortgage Corporation Limited has been found by the Federal Court, Melbourne, to have engaged in misleading or deceptive conduct in respect of a television advertisement for its home loan products.
Justice Merkel also has made an order to restrain Wizard for 18 months from publishing or broadcasting advertisements for housing loans at specific interest rates with features the loans do not have.
The declarations and order follows action taken by the Australian Competition and Consumer Commission under the Trade Practices Act 1974.
The ACCC alleged that a television advertisement, broadcast in Melbourne, Brisbane and the Gold Coast during June and July 2001 for Wizard, misled consumers as to the features that were available with Wizard's 'Rate Breaker' 5.64 per cent interest rate housing loan. The features were: the capacity to have loan repayments directly credited from salary; the option of changing from monthly repayments to fortnightly or weekly repayments; and the absence of ongoing monthly fees. The features were only available to consumers who took out one of Wizard's other housing loans at a higher interest rate, not the Rate Breaker loan.
Justice Merkel stated: "The contravening advertisement resulted from a systemic failure within Wizard to set in place procedures that ensured all advertising received legal approval".
In ordering the injunction sought by the ACCC, Justice Merkel stated: "I am not satisfied that the procedures that Wizard has set in place since the advertisement are adequate to prevent a repetition of contravening conduct of the kind that has occurred".
While the injunction is to run for 18 months rather than the three years sought by the ACCC, Justice Merkel said that he expected that within that time Wizard would establish and maintain appropriate and adequate procedures to ensure that there is not a repetition of contravening conduct.
He declined to order that Wizard implement a corporate compliance program or corrective advertising as sought by the ACCC, stating he was satisfied the injunction ordered was, in the circumstances, a sufficient inducement for Wizard. He did not regard it as appropriate or necessary for the court to exercise its injunctive power to impose such a program on Wizard.
"The home loan market is a competitive one and it is crucial that companies provide consumers with accurate and truthful information in making their choice for such an important product like a home loan", Acting ACCC Chairman, Mr Sitesh Bhojani, said today. He also noted the importance the court attached to compliance programs in both preventing initial contraventions and the repetition of contravening conduct, even though one was not ordered in this instance due to the granting of an injunction against Wizard to deter a repetition of similar conduct.