TSB looks to have avoided Kiwibank's rate promise problems

Under that offer, TSB pledged to beat any nationally advertised mortgage with a fixed interest rate that was offered by any of the big four Australian-owned banks.

A similar offer in the early 2000s landed Kiwibank in hot water with the Commerce Commission. 

But this time around appears to be different.  The commission says it has had no complaints about the TSB offer and has not undertaken any investigation.  

TSB said it was taking last year's 'rate match' pledge a stage further.  It would offer a mortgage 0.05% below any fixed, nationally advertised offer from the four big Australian-owned banks, ANZ, ASB, BNZ or Westpac. 

This was subject to the borrower meeting TSB's normal lending suitability and affordability criteria.

In 2002, Kiwibank made a similar offer, leading to a complaint of misleading advertising from another lender.  

In 2003, the Commerce Commission basically upheld the complaint. 

It said Kiwibank's advertising was liable to mislead, because it suggested it would undercut any lender.  But in fact, the offer only applied to banks with branches nationwide.

Kiwibank then agreed to change its advertising.  

In light of this, TMM asked the Commerce Commission for a view on the TSB offer.

In response, the Commission said it couldn't comment on this without conducting an investigation, and this had not happened.    

“To date we have not received any complaints about TSB's interest rate beat promise, and we have not opened an investigation into this matter.”

It appears that TSB has specifically averted Kiwibank's troubles by limiting its offer to the big four Australian banks. This leaves large numbers of small, non-bank lenders out of the picture.  

It was one of these small non-bank lenders that filed the complaint about Kiwibank with the commission. 

Asked to comment on this, TSB reiterated that its current home loan campaign beats any ANZ, ASB, BNZ or Westpac nationally advertised fixed home loan rate by 5 basis points, subject to lending criteria and terms and conditions.

“This campaign allows borrowers to clearly understand that TSB will beat those rates by 0.05% so that home buyers can make informed choices,” the bank said in a statement. 

“It differs from campaigns run in the past by other lenders which claimed to have the cheapest home loans in the market but only provided a rate match.”