Adverts for financial products promise much but proceed with caution, writes Laura Slattery.

Financial products are complex things. All the catches are usually buried in novel-length lists of terms and conditions, making it possible to end up even more confused by reading the small print.

But when first encounters with new products or services are through advertisements, the message couldn't be simpler: buy this now and your life will change for the better.

There is only so much you can squeeze into a 30-second television or radio ad without sending drivers to sleep at the wheel, and often the novel-length lists get distilled into a few lines of tiny print flashing at the bottom of the screen or a suddenly hurried radio voice-over reminding listeners that "terms and conditions apply".

Other standard qualifiers include warnings that the value of your investment can go down as well as up and that past performance is, sadly for many tech investors circa 1999, no guarantee of future returns.

"You would find with radio that the equivalent of the footnote is rammed in at the end at high speed. We haven't tripped anyone up on that yet, but it is something we are aware of," says Mr Ed McCumiskey, chief executive of the Advertising Standards Authority of Ireland (ASAI). "You can't put too much into it, because the message has to be reasonably clear."

Advertisers of financial products must follow a number of different sets of rules on what they can and cannot say and what they must not leave out.

Laid out by the Central Bank, the ASAI and the Office of the Director of Consumer Affairs (ODCA), the rules are designed to protect consumers from being misled.

The well-worn stock phrase "terms and conditions apply" is enough to trigger most people's cynicism, but there are still limits to what companies can get away with hiding in their "did we forget to mention?" disclaimers. "Terms and conditions can only be minor qualifications to the main promise and, naturally, in relation to financial products we would tend to be fussy," says Mr McCumiskey.

For example, a credit provider can't advertise its finance arrangements as being "interest free", if customers who don't pay back the credit in full within six months then find themselves being charged a double-digit interest rate for the whole period since the credit was issued.

Credit rules currently regulated by the ODCA require that the annual percentage rate of interest (APR) is as prominent as any other figure shown in a credit sale, including introductory rate offers.

The number and frequency of payments must also be stated, as well as the period over which payments are required and details of any other fees.

The ODCA rules should prevent car dealers, for instance, from hiding balloon payments or conditions locking customers into five-year repayment schedules on page 13 of a 20-page contract.

An advertisement should not prompt a mass breakout of calculator usage across the country as consumers attempt to assess the total price of a product. The ASAI's complaints committee recently upheld a complaint against an Aer Lingus press ad, which showed the total fare in "bubbles" as a mere footnote to a lower figure - the fare net of taxes and charges.

It also upheld a complaint against Ryanair for advertising "free flights from Ireland", indicating in a footnote that taxes and charges were payable. An offer can only be described as free if the consumer pays no more than standard postage or delivery costs.

The ASAI code has a separate section devoted to financial services and products, most of which echoes regulations contained in various Central Bank publications. Mr McCumiskey says the authority refers complaints to the Central Bank if the advertisement is clearly in breach of their rules. In 2002, just five complaints about financial services and products, excluding travel, were investigated.

Consumers can make complaints directly to the Central Bank and, from this summer, to the Irish Financial Services Regulatory Authority (IFSRA), the new single financial regulator. "IFSRA will have a much stronger consumer mandate and is going to be focusing more on transparency of information. Obviously, advertising will come within that ambit," says a spokesman for the Central Bank.

IFSRA's UK equivalent, the Financial Services Authority, has in the past criticised the use of past performance statistics in advertisements, amid concerns that companies are misleading consumers by using unrepresentative timeframes.

For example, a managed fund may have an above average performance for the last year, but consistently lag other funds over the longer term. Individual fund managers often move on from investment firms, rendering the firm's track record somewhat irrelevant.

The Central Bank's advertising regulations state that any information about the past performance of a product or service must not be selected so as to exaggerate its success or disguise its lack of success.

Ads must contain the warning that "past performance may not be a reliable guide to future performance".

Past performance can be "a useful tool" for comparing like-for-like products such as managed funds, according to Mr Tice O'Sullivan of online financial advisers, Primafinance.ie. Even in a quiet investment market, the practice is still common.

"If people hear advertising that such and such a fund has done X per cent over the last 10 years, that's what captures their attention," he says. Consumers shouldn't rely on these statistics alone, he warns: there are other factors to take into account, including management costs.

Debt consolidation loans are another instance where statistics are used selectively, Mr O'Sullivan says.

Monthly savings in the short term are highlighted, while the potential long-term interest cost is ignored. "I've seen ads that say 'I went to so and so and consolidated my loans and ended up saving €200 a month', but they don't tell you what it's going to cost you over the full term," says Mr O'Sullivan.

Tracker bonds are another type of a complicated product marketed in a rather flattering light. For example, some might say in big letters that the bond gives investors the chance to earn "up to 70 per cent growth on a basket of shares".

This usually won't mean that the overall return on the bond is capped at 70 per cent, on top of capital guarantees. On closer inspection, it might not even transpire that investors can earn up to 70 per cent of the total growth on the basket of shares, where they could afford to have some winners and some losers, Mr O'Sullivan notes.

Instead, the growth on each individual share is capped at 70 per cent, "so they all have to be winners".

Mr John Geraghty of LA Brokers.ie, a discounted life assurance intermediary, knows what he would like to see included in advertising regulations for lenders and insurers.

Lenders make mortgage protection policies compulsory for borrowers, pushing often more expensive policies sold by their insurer of choice. "It should stand out in bold that they can purchase protection elsewhere," says Mr Geraghty. "It should be written like a warning on a packet of cigarettes: you have the right to shop around."

Hibernian's first year "loyalty bonus" on its with-profits product, the Celebration Bond, could also be misconstrued, according to Mr Geraghty. "That could be a bit a deceptive, because they \ won't actually see the return in one year," he says.

With-profits products, which haven't generated too much, if any, profit for consumers lately, smooth returns over a term of around 10 years.

To some extent, it doesn't matter when the bonuses are awarded: investors are simply receiving returns during the first year that they would get on maturity anyway.

But regulations can be counter-productive, he argues. Companies are "very inventive" when it comes to advertising: "If you push it down one way, it'll rear its ugly head in another way."