Financial services companies have been warned against misleading and incomplete advertising when new regulations to protect consumers are introduced next month.
Claims that banking is "free" when it is not, a failure to include warning notices in advertisements and the provision of terms in barely-legible small print are among the concerns raised by the financial regulator.
The regulator has written to all firms in the sector outlining concerns about advertising standards for financial products based on its own monitoring and on public complaints.
While many of the issues raised are not currently illegal, they will be after July 1st, when the new Consumer Protection Code comes into force.
The code, which will apply to all banks, building societies, credit unions, insurance companies and investment intermediaries, bans unsolicited pre-approved credit and places restrictions on cold-calling by financial firms.
It also requires firms to ensure that their advertising is fair and not misleading.
The Irish Banking Federation (IBF) yesterday described the regulator's letter as a welcome clarification of the code and the way it would be interpreted.
However, its head of public affairs, Felix O'Regan, said it was possible that some banks would be in contact with the regulator about interpreting the rules differently.
One of the first effects of the new code will be to put an end to claims of "free" banking when charges apply if certain criteria, such as the maintenance of a minimum balance or a minimum number of transactions, have not been met. The regulator says that it is misleading to describe a service as "free" when only certain fees are not applied.
In response to complaints about the size of small print in financial advertising, the regulator has warned firms of their obligation to provide information clearly.
As a rule of thumb, it says, the size of the print should be directly proportionate to the importance of the information being conveyed.
It also warns against "rushed disclosures" in radio advertising.
Other areas of concern to the regulator include:
Incorrect or absent information which is required, such as disclosure statements, warning notices and the use of interest rates not expressed in terms of APR;
The use of illustrative maximum benefits or rates of return or interest rates where these apply to only a small percentage of customers;
Misleading product names;
Misleading and exaggerated claims about intermediary appointments. In an example cited, an intermediary claimed to have appointments from a number of firms, whereas in fact it had a letter of appointment from one firm, which in turn had appointments from the institutions in question;
The inclusion of warning notices ("the value of investments may go down as well as up") in the small print of advertisements.
The regulator has also reminded financial institutions that all elements of the code must be implemented by July 1st, although it said that it would take into account any technical difficulties which arose during the first six months.
Mr O'Regan, who indicated last month that some of his members might have difficulties implementing all sections of the code by the July deadline, said he did not know whether this was still the case.
He said that the IBF was "out of the loop" on compliance with the code, which was now the subject of direct discussions between the regulator and individual institutions.
