Macquarie Bank has admitted to breaching the Corporations Act over the promotion of a 'welcome' interest rate for new savings account customers, and could face a $14 million civil penalty in proceedings brought by ASIC.
ASIC alleged the bank's description of the rate as a 'welcome variable rate' and a 'bonus' could have led customers to believe it was paid on top of the standard variable rate. In fact, the Welcome Rate generally operated as a fixed rate that applied instead of, rather than in addition to, the standard rate during the four-month promotional period, the regulator said.
The bank said it would not contest the proceedings and is expected to pay a $14 million civil penalty, subject to court approval. The penalty comes in addition to $8.8 million in remediation Macquarie has already paid to nearly 40,000 customers.
The bank said the ASIC announcement related to products offered on its website between December 2021 and September 2022.
'Macquarie's website offered a Welcome Rate on its Macquarie Savings Account,' the bank said in a statement. 'The matter arose because, when standard variable rates increased and exceeded the Welcome Rate, customers were instead paid the higher standard variable rate though some expected a bonus margin over that rate.'
'Macquarie acknowledges that some of the wording on its website was not sufficiently clear and may have caused confusion,' the bank said.
ASIC commissioner Alan Kirkland said Australians had almost $1.8 trillion in household deposits, but the conditions attached to higher savings rates could be difficult to understand. He urged consumers to check they were receiving the rate they had been promised by their bank.
'Higher advertised rates may only apply for a limited time or may depend on the customer meeting certain conditions,' Mr Kirkland said. 'Consumers should check what conditions apply, whether they are meeting them and whether their bank is paying the interest rate they have been promised.'
He said in the case of Macquarie: 'This wasn't just unclear wording. Macquarie's systems and controls were not rigorous enough to identify the risk that customers would misunderstand how the Welcome Rate worked.'
Macquarie's head of banking and financial services Ben Perham said the bank's customers had high expectations of it, 'and although ASIC has acknowledged our actions were not deliberate, we should have better explained on our website how the Welcome Rate would be applied and we apologise for any confusion caused.'
'We received some customer complaints regarding the description of the Welcome Rate on our website, and we elected to pay $8.8 million in compensation to put customers in the position that they would have been if the Welcome Rate was a fixed bonus interest margin,' Mr Perham said. 'Additionally, we have conducted a thorough review of all product descriptions we use across our website.'
Analysis
Why This Matters
- The case highlights how confusing promotional interest rate offers can mislead consumers, at a time when household deposits total nearly $1.8 trillion.
- The jointly proposed $14 million penalty and $8.8 million in remediation set a precedent for how banks may be held accountable for unclear product descriptions.
- ASIC has signalled it will scrutinise other banks' savings rate promotions, warning consumers to check they are receiving the rates promised.
Background
Macquarie Bank is an Australian financial services group offering banking, wealth management and investment products. The ASIC action concerns a 'Welcome Rate' offered on its savings account between December 2021 and September 2022. The regulator alleged the bank breached its obligation to provide financial services efficiently, honestly and fairly under the Corporations Act.
Key Perspectives
ASIC commissioner Alan Kirkland: Said the case was not just a matter of unclear wording; that Macquarie's systems and controls were not rigorous enough, and that consumers deserve clear information about savings rates.
Macquarie Bank: Said its actions were not deliberate but that it should have better explained the Welcome Rate, and apologised for any confusion. It has already paid $8.8 million in compensation.
What to Watch
- Whether the NSW Supreme Court approves the proposed $14 million penalty.
- Whether ASIC brings similar actions against other banks over savings rate promotions.
- Macquarie's ongoing review of all product descriptions across its website, and any further remediation that may result.
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedMacquarie admitted failures in promoting its Welcome Rate to new savings-account customers.Latest business news: “Macquarie Bank has admitted to failures in the promotion of its "welcome" interest rate for new savings account customers.”
- SupportedMacquarie could face a $14 million civil penalty, subject to court approval.Latest business news: “Macquarie Bank said it would not contest the ASIC proceeding and is expected to pay a $14 million civil penalty. [...] The ASIC case and proposed penalty is subject to the court's approval.”
- SupportedASIC alleged the Welcome Rate wording could lead customers to believe it was paid on top of the standard variable rate.Latest business news: “Macquarie described the interest rate as a "welcome variable rate" and a "bonus", which ASIC alleges could have led customers to believe it was paid on top of the standard variable rate.”
- SupportedDuring the four-month promotional period, the Welcome Rate generally applied instead of the standard rate, not in addition to it.Latest business news: “In fact, the Welcome Rate generally operated as a fixed rate that applied instead of, rather than in addition to, the standard rate during the four-month promotional period, the regulator said.”
- SupportedMacquarie had already paid $8.8 million in remediation to nearly 40,000 customers.Latest business news: “The penalty, which the parties have jointly proposed to the NSW Supreme Court, comes in addition to $8.8 million in remediation initiated by Macquarie which has already been paid to nearly 40,000 customers.”
- SupportedThe ASIC announcement related to products offered on Macquarie's website between December 2021 and September 2022.Latest business news: “It said the ASIC announcement related to products offered on its website between December 2021 and September 2022.”
- SupportedMacquarie said customers were paid the higher standard variable rate when it exceeded the Welcome Rate, though some expected a bonus margin over it.Latest business news: “The matter arose because, when standard variable rates increased and exceeded the Welcome Rate, customers were instead paid the higher standard variable rate though some expected a bonus margin over that rate.”
- SupportedKirkland said Australians had almost $1.8 trillion in household deposits and that conditions attached to higher savings rates could be difficult to understand.Latest business news: “ASIC commissioner Alan Kirkland said Australians had almost $1.8 trillion in household deposits, but the conditions attached to higher savings rates could be difficult to understand.”
- SupportedKirkland said: “Higher advertised rates may only apply for a limited time or may depend on the customer meeting certain conditions.”Latest business news: “"Higher advertised rates may only apply for a limited time or may depend on the customer meeting certain conditions," Mr Kirkland said.”
- SupportedKirkland said Macquarie's systems and controls were not rigorous enough to identify the risk that customers would misunderstand the Welcome Rate.Latest business news: “Macquarie's systems and controls were not rigorous enough to identify the risk that customers would misunderstand how the Welcome Rate worked,”
- SupportedPerham said Macquarie should have better explained how the Welcome Rate would be applied and apologised for any confusion caused.Latest business news: “we should have better explained on our website how the Welcome Rate would be applied and we apologise for any confusion caused.”
- SupportedPerham said Macquarie received customer complaints and elected to pay $8.8 million in compensation to put customers in the position they would have been in if the Welcome Rate had been a fixed bonus interest margin.Latest business news: “We received some customer complaints regarding the description of the Welcome Rate on our website, and we elected to pay $8.8 million in compensation to put customers in the position that they would have been if the Welcome Rate was a fixed bonus interest margin,”