AGC $100,000 refund to creditline customers

Australian Guarantee Corporation Limited will refund about $100,000 in interest applied on account keeping fees to its CreditLine customers following discussions with the Australian Competition and Consumer Commission.

The ACCC was concerned that the interest was being applied to a number of accounts that had been promoted as having a "guaranteed interest free" period, which raised implications under the misleading and deceptive conduct parts of the Trade Practices Act 1974.

In October 2000 AGC introduced an Australia-wide $2.50 monthly account-keeping fee as part of new fees and charges to apply to customers using CreditLine, a personal finance product. Later that month the ACCC got complaints from CreditLine customers claiming that AGC had charged interest on the account-keeping fee. Most complaints were from customers who had signed up to CreditLine to obtain interest-free finance on household purchases.

"To charge interest on fee on interest-free accounts would be misleading conduct and a contravention of the Trade Practices Act", Acting ACCC Chairman, Mr Rod Shogren, said today. "AGC advised the ACCC that the interest was charged as a result of a computer system problem and acted quickly to reduce the $2.50 monthly fee to compensate its customers until the problem is fixed".

AGC acknowledged the ACCC's concerns and advised that it never intended to charge interest on the fees. It is expected that AGC's computer system will be fixed by the end of March 2001.