Finally, ASIC has stepped in and said the big four banks’ “multibrand” strategies are misleading and it will be keeping a close watch on their conduct.
Not all Australians know it, but St George, Bank SA, Bank of Melbourne, uBank, BankWest and RAMS are all owned by one of the big four. However, it’s not their ownership that has got ASIC’s attention.
ASIC’s Greg Kirk said “We are aware of the issue and we are actively monitoring the advertisements of banks using these multi-branding strategies to make sure that consumers are not being misled”. For example, recently St George said that it “will beat any advertised home loan rate from the big banks”, when in fact it is owned by Westpac (ASX: WBC).
Bank of Melbourne, also owned by Westpac, invited unsuspecting customers to “Get a better rate than the big 4”.
Credit Unions have had enough and are calling for new regulations that force subsidiary brands to display who owns them in their advertising campaigns. Alternatively, here’s a quick list:
- Commonwealth Bank (ASX: CBA) owns BankWest and announced an intention to take a majority stake in Aussie Home Loans
- Westpac owns RAMS, St George, Bank of Melbourne and Bank SA
- NAB (ASX: NAB) owns UBank
Many investors know that companies aren’t always what they seem to be, but the general public deserves better.
Investors chasing banking stocks that provide growth and income should be looking straight through the tricky advertising campaigns. The reason the banks bought these subsidiaries is to gather a greater share of the Australian home loan market through basic retail banking practices. If banks are looking for growth they’ll head overseas, like ANZ (ASX: ANZ) has recently done. Alternatively, investors could find smaller financial institutions like Suncorp (ASX: SUN) outside the big four.
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Motley Fool contributor Owen Raszkiewicz owns shares in ANZ and Suncorp.