ASIC has released Report 353: Further review of term deposits (REP 353) that makes recommendations to improve advertising in relation to the automatic rollover of term deposits and the practice of dual pricing by authorised deposit-taking institutions (ADIs). (Background)
ASIC considers that it is important that investors have sufficient information to make a decision about whether to change their term deposit when it rolls over, particularly about the interest rate they will receive. ASIC considers that it is best practice for investors to receive this information both before and after the term deposit rolls over, so that they have ample opportunity to consider whether they wish to keep the term deposit or look for alternatives (which may include investing with the same ADI for a different term).
ASIC expressed concern about:
- mail out campaigns to existing ‘selected’ customers, advertising term deposits at ‘special’ rates or as a ‘special’ or ‘exclusive’ offer. This may be misleading if the offered rates are generally available and interest rate schedules are not enclosed.
- unqualified representations about ‘guaranteed returns’ which were inconsistent with the Australian Government’s deposit guarantee scheme.
- advertisements which gave the overall impression that term deposits are likely to provide consistently higher returns than another savings account product when this was not necessarily the case.
