False or misleading loan calculator

The difficulty with any automated calculator for a consumer is understanding the assumptions on which it is based. If the calculator relates to financial services it could be in breach of the ASIC Act if it is misleading.

ASIC has announced it has obtained orders in the Supreme Court of Queensland against Gold Coast company, Etracka Pty Ltd (Etracka), following concerns over a loan calculator licensed to mortgage brokers throughout Australia.

These orders follow allegations by ASIC that the information provided by the company’s Express Simulator calculator was false, misleading or deceptive or likely to mislead or deceive.
 
The Court ordered that Etracka add a warning to Steps 1 and 4 of the Express Simulator, and to the Simulation Express Report which is subsequently emailed to the user of the calculator. This warning will now advise users that if they have not elected to make an additional monthly repayment into the Non-transactional Loan (which is as high as reasonably possible having regard to the user’s financial circumstances and the terms and conditions of their loan), the calculator will not provide a reliable comparison between a Non-transactional Loan and a Transactional Loan used in accordance with the eTracka Strategy.

The Court also ordered that Etracka send corrective notices to its members, clients, and licensees and users of the Express Simulator calculator within seven days.