WHAT THE REGULATOR SAYS

CAROLINE Silva, the executive of regulatory policy at the Financial Sector Conduct Authority (FSCA), had the following to say when Personal Finance asked her about the advertising of interest rates on fixed-term deposits and endowment policies: “The FSCA recognises that there is not a uniform approach across the financial sector when advertising interest rates that a customer could earn in respect of a financial product. Customers are also not able to easily compare products unless they are able to calculate and convert the different interest rates used.

“To address some aspects of the concern, the conduct standard the FSCA has drafted for banks does encompass requirements with regards to interest rate disclosure and advertising, amongst other requirements, that we would like to see in place from a conduct authority perspective.

“The extent of the proposed rule is that where a bank advertises the interest payable in respect of a deposit product, the bank must, in addition to any other interest rate being disclosed, also disclose the effective annual interest rate of the financial product.

The aim of the requirement is to enable comparability of products and to ensure that customers are not misled.

“The standard was published in April this year for public comment, and we are currently assessing the comments received. The standard and all supporting documents are still available on our website, however, the comment period has already closed.

“The aim is to have the standard finally published and in force by early 2020 although some requirements may have different effective dates.

“Over and above this, we are looking to harmonise all sectoral laws so that we can have consistency with regards to advertising and disclosure.”