Macquarie staring down $14 million penalty over savings accounts rates

• Macquarie is facing a $14 million civil penalty over allegations it misled consumers about how its promotional “welcome rate” would be applied to savings accounts.
• The bank admits that some customers could have been confused by its messaging, and agreed to the $14 million fine.
• ASIC Commissioner Alan Kirkland said consumers were not responsible for ensuring promotional rates were applied correctly.

Macquarie Bank is facing a $14 million penalty after admitting customers could be confused about how its “welcome rate” would be applied to savings accounts.

The Australian Securities and Investments Commission (ASIC) alleged that Macquarie variously described its welcome rate as a “welcome variable rate” and a “bonus”, which could lead customers to believe it was paid on top of the standard variable rate.

ASIC brought the case to the NSW Supreme Court, where Macquarie admitted to contravening the Corporations Act 2001.

Both parties jointly proposed that Macquarie pay a civil penalty of $14 million, which the Court will now decide if it is appropriate.

The proposed penalty comes in addition to the $8.8 million in remediation Macquarie initiated, which has already been paid to nearly 40,000 customers.

ASIC Commissioner Alan Kirkland said it was not up to customers to go through their statements to ensure their bank was operating fairly.

“Banks must get the basics right, which includes having systems and processes that deliver on the promises they make to customers, Kirkland said.

“Customers should not have to scrutinise every transaction to check their bank has paid the correct interest or charged them correctly.

“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.”

Subscribe here for our FREE Tuesday and Thursday newsletter

Email address

Subscribe

In a statement to The Money Edition, Macquarie said the bank acknowledges that some of the wording on its website was not sufficiently clear and may have caused confusion.

“We know customers value our straightforward savings offering, where we pay a leading interest rate without conditions or monthly fees,” Ben Perham, Head of Banking and Financial Services at Macquarie Group, said.

“Our customers rightly have high expectations of us, 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.”

Perham said the bank identified the issue after receiving customer complaints.

“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,” he said.

“Additionally, we have conducted a thorough review of all product descriptions we use across our website in relation to our Transaction and Savings Account products and have prioritised the uplift of our governance, systems, controls, and procedures associated with the creation, approval and publishing of any future customer-facing collateral.”

Kirkland said consumers were looking carefully at their financial products, now more than ever.

“At a time when Australians are contending with cost-of-living pressures, consumers deserve clear information about savings rates and the financial benefits they are promised,” he said.

The proposed penalty and resolution put forward by both parties remain before the court.