Banks, you’re not fooling us anymore

Banks, you're not fooling us anymore

The big banks have been misleading the unsuspecting Australian for too long.

Owen Raszkiewicz

Owen Raszkiewicz is a Motley Fool Contributor. Owen has been a Contributor since 2013, having also spent time as a Fool writer/analyst. He also worked as an Investment Analyst at Zenith Investment Partners, Australia's top research house specialising in managed funds. Owen has appeared on Channel 10's The Project and was invited on the BBC. He holds a Masters of Applied Finance, Masters of Financial Planning, Bachelor of Technology, Advanced Diploma of Financial Services and Diploma of Mortgage Broking Management. In addition, Owen has passed Level 1 of the Chartered Financial Analyst (CFA) Program. He has taken the Banking + Finance Oath (BFO). When he is not writing, Owen is Managing Director of Rask Finance, an Australian financial education company. You can email him: [email protected].

Published June 18, 2013 10:24 am AEST

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.

Foolish takeaway

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.

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