Comparison Rate Disclosure in Advertising

Key takeaways

• Quote a rate and the comparison rate obligation is generally triggered.
• Equal prominence means genuinely equal - not smaller, not below the fold.
• The comparison rate warning statement must accompany it.
• The safest option in short-form media is not to quote a rate at all.

What does the obligation require?

The comparison rate regime under the National Credit Code exists because a headline rate excludes fees, and two loans with identical rates can cost very different amounts. The comparison rate folds prescribed fees and charges into a single figure calculated on standard assumptions.

Where an advertisement for a consumer credit product states an interest rate, the comparison rate must generally be shown with equal prominence, along with a warning statement explaining that the comparison rate is based on a specified example and that different amounts and terms will produce different rates.

The regime does not apply to all credit - business lending sits outside the consumer credit framework - but for home loans, personal loans and other consumer credit, it applies to the advertising regardless of channel.

What counts as advertising a rate?

The last row catches brokers. Content on your own profile is your advertising, including material a client wrote. A testimonial quoting a specific rate creates the same disclosure question as if you had written it.

How do you comply in practice?

Three workable approaches, in order of how much risk they remove.

1. Do not quote rates in short-form media. Instagram stories, brief video and small display formats do not accommodate a comparison rate and warning at equal prominence. Talk about process, service and outcomes instead - which is better marketing anyway, because a rate dates immediately.
2. Where you do quote a rate, build the disclosure into the creative at the same size and in the same field of view. Equal prominence is assessed on how it actually appears, not on whether the text exists somewhere.
3. Use your licensee's approved templates. Aggregators maintain compliant formats precisely so brokers do not have to solve this individually.

All of it stacks with the general prohibition on misleading or deceptive conduct and with best interests duty. A compliant comparison rate does not rescue an advertisement that promises the lowest rate in the market or implies approval is guaranteed.

Run new creative past your licensee's marketing approval before publishing. That is what the process is for, and pre-approval is far cheaper than a correction after a complaint.

Frequently asked questions

Do I need a comparison rate on a social media post?

If the post advertises an interest rate for a consumer credit product, the comparison rate obligation generally applies regardless of medium. The simplest way to avoid the problem in short-form formats is not to quote a rate.

What is the comparison rate warning statement?

A prescribed statement that must accompany an advertised comparison rate, explaining that it is based on a specified example and that different loan amounts and terms will produce a different comparison rate.

What does equal prominence mean?

The comparison rate must be as noticeable as the interest rate - same approximate size and visibility, in the same field of view. Small print elsewhere in the creative does not satisfy it.

Does this apply to business loans?

The comparison rate regime applies to consumer credit under the National Credit Code. Genuine business lending sits outside it, though misleading and deceptive conduct prohibitions still apply to all advertising.

Related reading

• NCCP Marketing Rules: What Brokers Can and Cannot Claim
• Comparison Rate: What It Includes and What It Hides
• Cost Per Funded Deal: The Metro Broker Maths

Sources

• National Credit Code - comparison rates — Commonwealth of Australia
• Advertising financial products and services (RG 234) — ASIC