ASIC has acted to close down loan calculators on more than 100 websites of Australian financial institutions, including banks, credit unions, other lenders and finance brokers. The calculators suggested that using a line of credit will result in the consumer paying off their home loan more quickly.
‘Most lines of credit charge higher interest rates than standard home loans, so when you stop to think about it, it was extraordinary to suggest that paying higher interest could pay off a loan sooner’, said Mr Greg Tanzer, ASIC’s Executive Director of Consumer Protection and International Relations.The loan calculators produced a graph, comparing the time taken to pay off a standard loan with the time taken using a line of credit.
However, the way the calculator was designed meant that:
‘The calculator software was produced by infochoice.com.au in line with industry specifications, and was used by over 100 lenders and broker groups.”infochoice.com.au acted quickly to take down the calculators from over 100 websites once ASIC raised these concerns with it,’ Mr Tanzer said. ‘ASIC acknowledges the company took a co-operative and responsible approach that will benefit consumers.’