Natasha Bita | The Australian | April 25, 2012
The corporate regulator has stopped two of Australia’s biggest banks bombarding customers with credit card offers, in the lead-up to a credit crackdown from July 1.
The intervention means 100,000 customers who have already given the Westpac and Commonwealth banks their blessing to be tempted with higher credit limits, will need to give their consent again.
Westpac yesterday agreed to stop sending its customers messages about increasing credit card limits, after the Australian Securities and Investments Commission raised concerns that they were misleading.
The bank had sought customers’ permission to offer them higher credit card limits after July 1, when the federal government will ban unsolicited offers.
ASIC claimed the messages were misleading as they suggested customers could miss out on accessing extra credit funds unless they gave consent now.
ASIC commissioner Peter Kell said the messages had “created the impression that customers needed to act urgently”. This may have led customers to respond “without properly considering their options”, he said.
ASIC said 3700 customers had responded to Westpac’s request.
“Westpac has acknowledged ASIC’s concerns and has undertaken to not rely on the consents obtained from customers who may have been misled,” he said.
He said Westpac would contact each customer to “correct any misleading impression”.
Westpac is the second major bank to face ASIC intervention, after the Commonwealth Bank gave court-enforceable undertakings last month to scrap the consents it had obtained from 96,000 customers.
ASIC had claimed the bank’s email messages were misleading because they suggested that customers who failed to complete an electronic consent form would “lose the chance” to receive credit offers in future.
The Commonwealth Bank agreed to contact each of the customers to “correct any misleading impression”.
The new laws will ban banks and other credit card issuers from sending customers unsolicited offers to increase their credit card limits, unless they have the customer’s consent.
Mr Kell said customers would be able to provide or withdraw their consent at any time, and would be able to request a higher credit limit at any time.
Westpac said yesterday no customers had complained about its requests to give consent.
“We are notifying impacted customers that we will not be relying upon the consent provided,” a spokesman said. “If impacted customers do not want to provide consent, they do not have to do anything. If customers do want to re-provide consent, they can phone us or go to our website.”
Under the credit card crackdown — the last tranche of the Gillard government’s banking reforms — banks will also be banned from charging customers fees for spending more than their credit limit, unless they have agreed to be charged such a fee.
And credit card providers will be forced to direct repayments to the most expensive part of the credit card debt.
The federal government has already made it easier for customers to switch banks by banning exit fees on home loans.