Advertisements

Table of Contents

General Advertising Rules

The following rules apply to advertisements by regulated financial service providers other than those specifically regulated by the European Union Consumer Credit Act Regulations 2010.An advertisement is any commercial communication in respect of a regulated entity addressed to the consumer public or a section of it, the purpose of which is to advertise a regulated activity or regulated entity. It does not apply to sponsorship material and a prospectus drawn up in compliance with its prospectus directive.

A regulatory disclosure statement confirming who regulates the financial service provider must be included in all advertisements. This would usually be the Central Bank of Ireland or, if established in a foreign country but providing services in Ireland, the home state. In this latter case, it must also confirm that it is regulated by the Central Bank of Ireland for the conduct of business rules.

The design, presentation and content of an advertisement must be clear, fair, accurate and not misleading. It must not seek to influence consumers’ attitudes to the product or service or the service provider by any ambiguity, exaggeration or omission. The nature and type of the product or service concerned must be clear and must not be disguised in any way.

Without limiting the above general obligations, the advertisement must not be misleading in relation to the service provider’s independence or the independence of the information that provides, its ability to provide the product concerned, the scale of its activities, the extent of its resources, the nature of its involvement in the product or service, discuss the product or service, the past performance or possible future performance of the service or product.

The financial service entity must clearly show its name in all advertisements. It must be readily apparent that the advertisement is an advertisement.

Regulated entities must ensure the key information in relation to the service is permanent and is not obscured or disguised by the content, design or form. Small print or footnotes must only be used to supplement or elaborate key information and must be legible.

Qualifying criteria in relation to obtaining maximum savings or minimum price must be included in the body of the advertisement.

Benefits Claimed

The advertisements set out below must meet certain criteria and have notices which appear simultaneously with the benefits as advertised. In the case of non-print advertisements, they may be contained at the end of the advertisement.

It is not necessary to include warnings if the advertisement does not refer to the benefits of the product but only names of products or services and invites the consumer to discuss the product or service in more detail. If promotional or introductory interest rates are used, the expiry date must be specified and an indication of the rate applying thereafter must be given. Any assumptions made in the statement, promise or forecast in an advertisement must be clearly stated, reasonable and up-to-date.

An advertisement that promotes one or more products must clearly set out key information in relation to each product in a way that the consumer can distinguish between them. Any recommendations or commendations must be complete, fair and accurate. Recommendations and commendations require the consent of the author. If a recommendation is received from an employee, or if a person has received payment or the recommendation this must be stated in the advertisement.

If an intermediary is tied to a single provider for a particular product or service, this must be disclosed in all advertisements by that intermediary for their product or service.

Comparisons

Comparisons or contrasts must be based on facts provided by the regulated service provider on reasonable assumptions which are stated in the advertisements. They should be presented in a clear, fair, and balanced way and not omit anything material to the comparison or contrast.

Material differences between the products must be set out clearly. Where acronyms are used it must be stated what letters stand for. A product may only be described as free where it is available free of charge to the consumer.

Loan Warnings

The following applies to advertisements for personal consumers.

Certain warnings are required, which must appear in a boxed form and heavy type. An advertisement in relation to a residential mortgage must contain a statement regarding the risk that the home may be lost if payments are not kept up. An advertisement which includes an APR must clearly state if the rate is fixed or variable.

If an advertisement is for a term loan and displays the annual percentage rate and term, it must also show the total cost of credit by means of an example. This does not apply to the provision of mortgage credit.

An advertisement for a fixed-rate loan must contain a warning that charges may apply if the fixed-rate loan is paid off early.

An advertisement for personal lending must contain a warning that if repayments are not made, the account will go into arrears and this may affect future credit rating and the ability to access credit in the future.

Where credit is offered for the consolidation of debts, which shows sample figures, it must indicate the difference between the total cost of credit of the consolidated facilities and the total cost of the individual credit facilities that are consolidated. A debt consolidation mortgage must specify that the loan may take longer to pay than the previous term loans and that more] may ultimately have to be paid than if paid over a shorter term.

An advertisement for a variable-rate mortgage must specify that monthly payments may increase. An advertisement for an interest-only mortgage must state that the entire balance will still be payable at the end of the interest-only period. An advertisement for a lifetime mortgage must state that interest will be compounded and payable in full in circumstances such as death, sale of property, et cetera. It must state that the product may negatively impact on the ability to meet future funding needs.

An advertisement in relation to a home reversion scheme must state that the money received may be less than the actual market share value of the share of the home, and the purchasing product may negatively impact the ability to meet future funding needs.

Savings

Where an interest rate for a savings or deposit account is displayed in an advertisement, it must clearly state

whether fixed or variable
if fixed, for what period and an indication of the rate applicable thereafter
the relevant interest rate for each time quoted together with annual equivalent rate; each rate to be of equal size and prominence
minimum term or minimum amount required to qualify for the rate
if applicable, any tax payable on the interest earned

The annual equivalent rate contained in the advertisement must not be misleading. Assumptions used in the calculation of the annual equivalent rate must be reasonable, up-to-date, and clearly stated. A record of the manner of calculation must be maintained.

Investment Products

Where a product involves a risk that 100 per cent of the initial capital may not be repaid, a warning must be provided stating that some or all of the money invested may be lost.

Where a promised return of capital only applies on a specific date, there must be a warning to the effect that encashment before the particular date may cause the loss of some or all of the money invested.

An advertisement for a product for which there is no access to funds for the term of the product must contain a warning to this effect.

Where a regulated provider gives information about the past performance of an advertised product or service or of the regulated entity, the information must be based on

a product similar to that being advertised
must not be selected so as to exaggerate the success or disguise the lack of success of the product or service
state the source of information
be based on actual performance
state the period chosen, which must relate to the term of the product being advertised
include the most recent period
indicate details of transaction costs, interest and taxation that have been taken into account where applicable
state the basis on which he performance is quoted if applicable

Advertisements which contain information about past performance must contain a statement that past performance is not a reliable guide to future performance

Where a regulated entity has an interest or holding in a particular product that it advertises, this must be stated in the advertisement.

Performance

Where information is given in an advertisement about the simulated performance of a product or service of the particular financial service provider, this must be based on simulated performance that is relevant to the performance of the product or service or the entity concerned;

It must not be selected so as to exaggerate the success or disguise the lack of success of the product or entity itself. It must state the source and indicate whether and to what extent transaction cost interest and taxation have been taken into account.

An advertisement which contains information about simulated performance, must contain a statement that the figures are estimates and are not a reliable guide to the future performance of the investment.

Guarantees & Taxation

An account must not be described as guaranteed in an advertisement or potentially guaranteed unless there is a legally enforceable payment obligation by a third party who undertakes to meet the claim under the guarantee, the provider has assessed the value of the guarantee, takes account of the limited nature and extent the limitations of the guarantee, if the guarantor is connected, that this is the case that this is stated.

Where an advertisement refers to the impact of taxation, it must state the assumed rate of taxation and, where applicable that the tax rates and reliefs actually applying are those currently applying to that particular to the consumer or provider as appropriate

states that the matters referred to are only relevant to a particular class of consumer with particular tax liabilities identifying the types of consumer and liabilities
state who has responsibility for obtaining the tax benefit advertised
not describe the product or service as being free from liability to tax unless equal prominence is given to a statement that the income is payable for products for which tax has already been paid
not describe the product and service as being free from liability to capital taxation unless equal prominence is given to a statement where applicable if the value of the product is linked to a product which is liable to capital taxation

Fluctuations & Realisation

Any product or service which can fluctuate in price must contain a warning to the effect that the investment may go up as well as down.

Where a product is described as being likely to yield income or as suitable to a consumer who is seeking income, here the income may fluctuate; this must be specified by warning.

Where the product offers a facility to withdraw capital as an income equivalent, the effect of the withdrawal on such product must be explained.

Where a product or service is denominated in foreign currency, or where its value may be affected by foreign exchange rate changes, the advertisement must contain a warning to this effect.

An advertisement for a product which is not readily realisable must state that it may be difficult for consumers to realise or value the product. Where the product cannot be encashed before its maturity or incurs an early redemption charge this must be clearly stated.

Frontloading & Tracker Bond Issues

Where a product is subject to frontloading it must state that the deductions for charges and expenses are not made uniformly to the life of the product that are loaded onto an early period that if the consumer withdraws from the product in the early period, the practice of frontloading will impact on the amount of money which the consumer receives and that the consumer may not get the full amount back invested.

Where an interest rate is applicable to a proportion of a tracker bond is placed on deposits, the advertisement must also clearly indicate whether the rate is variable or fixed and, if fixed for what period, the relevant compound annual rate over the full term of the tracker bond applicable to the part put on deposits and whether tax is payable on the interest earned. Each rate provided to a consumer must be of equal font size and prominence.

Where a projected return on investment or a tracker bond is advertised it must ensure that the value of the projected rate is expressed and is shown as prominently as the equivalent compound annual rate. Where the projected rate of return for a tracker bond is advertised, and the parts of the bond are invested separately, the value of the return on the amount invested in each of the component parts over the full term must be expressed and shown as prominently as the equivalent compound annual rate.