ASIC saves Australia billions on term deposits.
The Australian Securities and Investment Commission (ASIC) is claiming to have saved Australians billions of dollars thanks to its review of bank practices and disclosure on term deposits.
Following a review by ASIC in 2010, Australia's banks have begun to alert customers of the often high interest rate advertised on term deposits, automatically rolling over to a much lower rate at the end of the term.
Before the bank alert system was in place, ASIC's 14 month review in 2010 found that up to 47 percent of term deposits rolled over on to a lower interest rate at a cost of $7.88 billion.
With disclosure of the risks of dual pricing in the terms and conditions now in practice, in its recent 7 month review, ASIC has found that the changes have significantly improved Australia's savings. Around just 11 percent of term deposits now roll over onto a lesser rate, worth just $1.9 billion.
"While term deposits are generally a safe, low-risk investment, they should not be a set-and-forget investment, and investors should still shop around to see what other rates are available,' said ASIC deputy chairman Peter Kell.
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