On 19 June 2009, the Federal Court declared that Whyte Corporation Pty Ltd had engaged in misleading and deceptive conduct regarding a mortgage calculator, known as the EquityExcel Plan.

ASIC took action in November 2008 against Whyte Corporation and Mr Gavin Whyte, the director of Whyte Corporation, alleging they contravened the Australian Securities and Investments Commission Act (ASIC Act) by representing that the EquityExcel Plan allowed borrowers to pay off their mortgage sooner and make substantial savings with no increase in their monthly payments or changes in their lifestyle.

ASIC alleged that this representation was misleading, or likely to mislead, as a borrower could only pay off their mortgage sooner or make substantial savings using the EquityExcel Plan if they made considerable additional repayments over and above their minimum monthly repayments.

By consent, the Court:

• Declared that Whyte Corporation and Mr Whyte contravened the ASIC Act;
• Restrained them from continuing to make the representation;
• Ordered them to write to their customers explaining the terms of the Court Orders and to notify ASIC if they considered that they had been mislead by Whyte Corporation and had suffered loss.

Greg Kirk, Senior Executive Leader, Deposit Takers, Credit and Insurance, said of the significance of the Court’s Orders:

‘People making important decisions about their home loans are entitled to believe that the information they are provided with, and are relying on, is accurate. This is the second action ASIC has had to take in relation to this type of misleading claim. Choosing a home loan is likely to be one of the biggest financial decisions a person will make. Mortgage brokers, who are often called upon to facilitate and help people through this process, have important responsibilities to ensure that the information they provide is accurate and truthful.

‘For consumers the key message is that the only way to pay off your loan sooner is by moving to a loan with a cheaper interest rate or by making extra repayments.’

Source: ASIC Media Release