What's the true cost of interest free?

The Federal Court of Australia placed Harvey Norman Holdings Limited and Latitude Finance Australia Pty Ltd under ongoing regulatory scrutiny following findings that national advertising campaigns for interest-free credit products were misleading.

The proceedings, initiated by the Australian Securities and Investments Commission (ASIC) in October 2022, concerned campaigns marketed across television, digital, and in-store channels, promoting “no interest” or “interest-free” offers without sufficiently disclosing associated costs.

ASIC alleged that consumers were likely to form the impression that the credit arrangements carried no cost during the promotional period, when in fact establishment fees, monthly account fees, and other charges applied. The advertising campaigns ran between January 2020 and August 2021 and primarily promoted payment through the Latitude GO Mastercard, which required consumers to enter into an ongoing credit contract. The regulator’s concerns focused on the overall impression created by the advertising when viewed as a whole, rather than isolated statements.

The case illustrates regulatory emphasis on clarity in consumer-facing financial communications, and on ensuring that national promotional campaigns accurately reflect the costs of credit products.

Conduct at Issue

The Federal Court proceedings addressed representations arising from coordinated campaigns by Harvey Norman and Latitude Finance. Key points included:

• Promotions suggesting interest-free or no-cost credit over extended periods.

• Requirement for consumers to maintain minimum payments without clarifying that this alone would not extinguish the balance within the advertised period.

• Limited prominence of disclosures regarding account establishment fees and ongoing monthly charges.

• Material misalignment between the impression given by the advertisements and the actual financial obligations of consumers.

ASIC submitted that these practices contravened sections 12DA, 12DB, and 12DF of the ASIC Act 2001, concerning misleading or deceptive conduct and false or misleading representations.

Procedural History

The Federal Court delivered its liability judgment on 18 October 2024, finding that both Harvey Norman and Latitude Finance were responsible for misleading consumers. The Court held that the overall impression created by the advertising when viewed as a whole suggested cost-free credit, which was materially inaccurate.

Latitude was liable as the credit provider and promoter, while Harvey Norman was liable through its participation in the campaigns and display of the promotional materials.

Following the judgment, formal declarations of liability were issued on 5 November 2024, confirming breaches of the ASIC Act and providing the framework for subsequent enforcement measures. ASIC sought civil penalties, adverse publicity orders, and compliance-related relief, with further hearings scheduled to determine the precise nature of penalties. ASIC’s application expressly sought pecuniary penalties, injunctions, and related remedial orders, with the penalty phase deferred pending the outcome of appeals.

Both companies filed appeals challenging the liability findings. The appeals were heard in August 2025, with the Full Federal Court unanimously dismissing the appeals in September 2025, upholding the trial court’s conclusions that the promotional campaigns were misleading. This outcome reaffirmed the original findings and set the stage for the penalty phase.

Federal Court Findings

The Court applied an objective assessment of consumer understanding, focusing on the overall impression created by the advertising when viewed as a whole, rather than the presence of disclaimers or minor clarifications. Key determinations included:

• Overall impression dominates: The advertisements conveyed that consumers could use credit facilities during the promotional period without incurring costs, despite mandatory fees.

• Materiality of omissions: Establishment fees and monthly account charges were deemed material; their absence from prominent disclosure misled consumers.

• Accountability flowed from each party’s involvement in the creation and dissemination of the advertising, including co-branding, national promotion, and in-store display.

• 
  

The Court emphasised that advertising must communicate the total cost of credit with sufficient clarity to allow consumers to make informed decisions, particularly for nationally promoted financial products.

Legal Considerations

The case highlights several statutory and regulatory frameworks:

• ASIC Act 2001 (Cth): Sections 12DA–12DF prohibit misleading or deceptive conduct, false or misleading representations, and conduct likely to mislead the public.

• Consumer protection obligations: Marketing of financial products must clearly disclose all costs, particularly when offering promotional credit.

• Accountability in cooperative campaigns: Accountability flowed from each party’s involvement in the creation and dissemination of the advertising, rather than from isolated conduct by a single participant.

  
  

These frameworks underpin ASIC’s enforcement approach, enabling regulators to seek both declaratory relief and penalties where consumer-facing financial communications are misleading.

Outcome

As at September 2025, the liability findings against Harvey Norman and Latitude Finance have been upheld by the Full Federal Court. Civil penalties and related orders remain pending, with ASIC preparing submissions on the appropriate relief.

The judgments confirm that national advertising campaigns are subject to strict scrutiny, and that omissions or misrepresentations of material cost components can constitute breaches of statutory obligations.

Professional Significance

The litigation provides multiple lessons for financial institutions, retailers, and corporate advisers:

• Promotional conduct is assessed holistically: Courts evaluate the overall impression created by the advertising when viewed as a whole, rather than isolated words or disclaimers.

• Disclosure prominence matters: Fees and conditions must be communicated clearly and prominently, not buried in small print.

• Co-ordinated compliance is critical: Accountability flowed from each party’s involvement in the creation and dissemination of the advertising, requiring integrated oversight in co-branded campaigns.

• Consumer perspective is decisive: Advertising is interpreted through the lens of a reasonable consumer; product complexity does not excuse misleading impressions.

  
  

For legal practitioners, the case reinforces the importance of rigorous review of marketing materials and coordinated compliance processes. For corporate clients, it highlights the regulatory and reputational risks associated with national promotional campaigns involving financial products standards to ensure consumers are not misled about the true cost of credit.