Home lender Mortgage Choice Ltd agreed to drop the word `unbiased' from future advertising after the financial industry watchdog found the claim to be misleading and deceptive.

In previous campaigns Mortgage Choice had claimed to be "totally unbiased" and that its consultants are "paid the same regardless of which lender or loan you choose".

But the Australian Securities and Investments Commission (ASIC) said Mortgage Choice and its franchisees only receive commission from and provide advice in relation to lenders on its own 27-member panel of banks and other finance providers.

It does not receive commissions from or provide advice in relation to other lenders not on the panel, ASIC said.

Mortgage Choice also published a 'Customer Charter' which contained the statement, "our lender panel is reviewed from time to time to ensure that we have a cross-section of lenders who can offer what we consider to be the best choice of home loans".

ASIC said that statement was misleading because the selection of members to the panel depended, amongst other things, on the lenders willingness to pay commission and make other payments to Mortgage Choice.

The home lender, with 350 franchisees across Australia, accepted an Enforceable Undertaking to no longer use the word unbiased in any future advertising or promotional material without making it clear that advice is limited to the 27 lenders from whom it receives commission.

The statement relating to the appointment of lenders to its panel from the Customer Charter will also be removed.

Mortgage Choice will place corrective advertisements in national and local newspapers and has agreed to compensate any customer who suffered loss because of the deceptive claims.

"This case highlights the need for anyone operating in the financial services industry, including mortgage brokers, to ensure that all claims in advertising and promotional material are completely accurate and correct," ASIC executive director of consumer protection and international Greg Tanzer said.

"It also shows that claims of being 'unbiased' or providing 'unbiased advice' must be strictly correct or adequately qualified, if they are to avoid liability for misleading and deceptive conduct."

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