Macquarie faces $14m penalty over confusing savings rate promotion

Macquarie Bank is expected to pay a $14m civil penalty over the way it promoted a savings account interest rate, amid regulatory scrutiny of complicated banking conditions. The bank has admitted breaching the Corporations Act, and a spokesperson said it would not contest the court proceedings.

The Australian Securities and Investments Commission said Macquarie used the descriptions “welcome variable rate” and “bonus” in promotional material in 2022. According to the regulator, those terms could have left some customers believing the offer would provide interest in addition to the bank’s standard variable rate, rather than a separate advertised rate.

As interest rates rose during that year, the difference between the promotional rate and the standard rate narrowed. Asic alleged in proceedings in the NSW supreme court that, after the standard rate moved above the welcome rate, customers received only the standard rate, without an additional bonus. Macquarie’s spokesperson said the bank would admit in court that it had failed to provide financial services efficiently, honestly and fairly.

Asic commissioner Alan Kirkland said customers should not need to examine every transaction to establish whether their interest payments were correct. He said banks needed systems and processes that fulfilled their commitments to customers. The problem extended beyond ambiguous language, he added, because Macquarie’s controls had not adequately identified the risk of customers misunderstanding the promotion.

The case comes as savings products increasingly attach strict requirements to prominently advertised rates, replacing the unconditional accounts that were once standard across the industry. A competition regulator study in 2023 found that 71% of bonus interest accounts missed out on the bonus rate each month because customers failed to meet conditions that were often difficult to understand.

Speaking on Wednesday, Kirkland cautioned that a bank’s highest advertised rate might apply only temporarily or depend on customers satisfying particular requirements. These can include depositing money each month, increasing the account balance or making no withdrawals. He urged consumers to check the conditions, whether they were meeting them and whether their bank was paying the promised interest.

The stakes are heightened by living costs, with many savers depending on interest for additional income or to build a home deposit. Australia’s official interest rate stands at an 18-year high of 4.85% amid persistent elevated inflation. RMIT finance professor Angel Zhong said promotional offers became more prominent when rates moved, making clear disclosure especially important. She said differences in wording could influence major decisions and called for rate descriptions to be treated as a core compliance risk with clear senior accountability.