# Sneaky T&C's in New BoI 3 Year Deposit Product



## Lightning (26 May 2013)

This is unbelievable and typical of the complexity that BoI employ with their deposit products to the detriment of consumers. 

BoI are heavily advertising a new 3 year "special term" term deposit product. This is different to their other 3 year "growth" term deposit product which is mentioned in the best buy thread. 

The rate offered is fixed for year one but variable in year two and three but you are locked for 3 years. It is not made very clear anywhere in the newspaper advertisements that this is the case. It is in the small print in the T&C's on the website.

You can bet that the rate will significantly decline on the first anniversary of the account leaving people locked at a low rate for 2 years.

How can BoI get away with locking peoples money away without advising as to the rate for the full 3 years at account opening stage? Also, how can BoI get away without making this sneaky T&C clear in their advertisements?

Avoid this product.


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## theresa1 (26 May 2013)

Good old BoI at it's best - in an ideal world state savings would bring out an advert for it's 3 year savings bonds and rip this Product apart.


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## Brendan Burgess (26 May 2013)

I can't believe that this product is in compliance with the Consumer Protection Code. 

It breaches the principle of unfair advertising. 

I expect that the CB will stop it.


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## Time (26 May 2013)

Only if someone complains about it.


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## advice pls (26 May 2013)

Wonder if you went in to open one how clear the sales pitch would be about it?


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## Luternau (26 May 2013)

Quite an imbalanced agreement. Do they not have to get approval for the product beforehand? So that it complies with consumer legislation/regulatory guidelines etc?


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## Brendan Burgess (26 May 2013)

No. Products are not pre-approved


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## Time (26 May 2013)

It would appear they don't have to.


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## Luternau (26 May 2013)

Have the CB not learned anything about what light touch regulation can result in? I was hoping they had!


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## Brendan Burgess (26 May 2013)

I don't think it would be possible to approve all products. 

But I do think that they should come down like a ton of bricks on BoI for this one.


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## The Ghoul (26 May 2013)

I pretended I hadn't seen this thread and went looking on BOI's website for fixed term deposits. Click on "save & invest" and then "fixed term accounts" and here is the first thing I saw, have bolded what I think is the misleading part


> At particular times in your life you may find that you have a sum of money you can put away. It could be a lump sum received through inheritance, retirement or even from savings built up over the years. One option for such a lump sum deposit is a Fixed Term Deposit Account. It offers security for your money *for the term chosen, with a fixed rate of interest.*
> 
> 
> Advantage Fixed Term Deposit Account
> ...


Clicking on the link for the Special Term Account 3 year brings up info on the gross and AER rates for the first 52 weeks/1 year, there's also the reasonably clear statement


> Interest rates for years 2 and 3 will be confirmed on the anniversary of the account


The sneakiest part of all IMO is where it says


> The account term is three years
> The rate is fixed each year


There is no doubt in my mind that this has the potential to mislead. Well done to CiaranT for spotting this.


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## Renter7 (26 May 2013)

Why is the first EUR480 Dirt free?

Agree with all the posts above.


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## Lightning (27 May 2013)

Thanks all. 

The press advertisements are one of the worst aspects of this with no mention of the fact that the rate is at the banks discretion for 2 years of the 3 year term.  

BoI clearly designed this product to lure customers in with an attractive rate for year one and then pay them next to nothing (possibly 0.01%) for year 2 and year 3 but to leave them with no way out. Trickery, entrapment and misleading. 

Hopefully, the media pick up on this. 



Renter7 said:


> Why is the first EUR480 Dirt free?
> 
> Agree with all the posts above.



Banks can offer DIRT free products for 3 and 5 year terms in order to help them compete with the NTMA, subject to certain conditions.


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## cbreeze (27 May 2013)

I was in my local BoI recently making a lodgement and the teller was trying to off load some savings products.  I told them no thanks that that for three-year terms they were not in contention.  You would not put your own money in the BoI I suggested.  and went off to buy a bond from NTMA  Interest rates will drop again.  Though while NTMA are good for now, the banks are lobbying to get the state to drop these rates.  NTMA can quickly get a new S.I. through over a weekend which will change their rates should they feel they need to be influenced by the Banks.


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## Bobby1 (27 May 2013)

This isn't a new product for BOI, they are just rehashing an old one, AIB offer similar "Special Term". The basic rules of the product are set by Revenue, in order to comply with earning a portion of interest DIRT free. I have looked at this at great lengths for banks thinking of introducing the product, but most abandoned it when you read the mind boggling rules Revenue thought up of .

[broken link removed]

If you look at the AIB version, they pay a variable rate of interest on a fixed term account, which goes against the grain really - fixed terms should have fixed rates!

The banks have to live within the crazy rules of the scheme to offer the product, these need to be reviewed on a wider scale


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## Brendan Burgess (27 May 2013)

Hi Bobby

That is very interesting.  This product from AIB and BoI leaves customers very vulnerable. 

Why would anyone opt for this account where you are stuck in it for three or five years and the bank can set the interest rate after year 1? 

(Look what happened to the unfortunate Bank of Ireland tracker mortgage holders in the UK, who didn't bother reading the terms and conditions. They are now on SVR mortgages.  )

What if AIB or BoI  drops the rate to 0.1% after year 1? Can the customer get out of the product? 

It is essential that banks who offer this product highlight the fact that the interest rate is at their discretion in Years 2 and 3.


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## Brendan Burgess (27 May 2013)

I see that this was raised 6 hours ago on the BoI forum on boards.ie

http://www.boards.ie/ttfthread/2056957782/1#post84799089

They have not replied yet.

See the ad attached. While the cartoon character in the ad is winking at us to let us  know that they are having us on, they don't specify an interest rate. Can anyone with a copy of the ad which is misleading on the interest rate , email a copy of it to me at brendan  at this website.

Brendan


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## Brendan Burgess (27 May 2013)

CiaranT said:


> Thanks all.
> 
> The press advertisements are one of the worst aspects of this with no mention of the fact that the rate is at the banks discretion for 2 years of the 3 year term.
> 
> BoI clearly designed this product to lure customers in with an attractive rate for year one and then pay them next to nothing (possibly 0.01%) for year 2 and year 3 but to leave them with no way out. Trickery, entrapment and misleading.



Hi Ciarán

The odd thing about the ad in the Sunday Times is that it does not mention a rate.  

€480 on the maximum deposit of €20,000 would be 2.4%, but it does not quote this. 

Have you seen a different ad which shows an "attractive" rate?


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## Brendan Burgess (27 May 2013)

I got the following statement from a spokesman for Bank of Ireland

Unfortunately, Bank of Ireland is bound by strict legislation on this product that does not permit us to fix or indicate the rates on this product for year 2 and 3. The specific legislation restricting this is contained in the Finance Act 2001, Section 7 (e) which states "(e) there shall not be any agreement, arrangement or understanding in existence, whether express or implied, which influences or determines, or could influence or determine, the rate (other than an unspecified and variable rate) of interest which is paid or payable, in respect of the relevant deposit or relevant deposits held in the account, in or in respect of any period which is more than 12 months" (page 150 on pdf).  Thus, while we are clearly meeting our obligations under CPC, we are bound and restricted by specific legislative conditions of this product.


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## Lightning (27 May 2013)

Brendan Burgess said:


> Why would anyone opt for this account where you are stuck in it for three or five years and the bank can set the interest rate after year 1?



Only those with a lack of financial knowledge would opt for such a product type!



Brendan Burgess said:


> (Look what happened to the unfortunate Bank of Ireland tracker mortgage holders in the UK, who didn't bother reading the terms and conditions. They are now on SVR mortgages.  )



Yeah, there have been other controversial BoI T&C decisions.   



Brendan Burgess said:


> What if AIB or BoI  drops the rate to 0.1% after year 1? Can the customer get out of the product?



Which they probably will. The customer is stuck for the remainder of the term. 



Brendan Burgess said:


> It is essential that banks who offer this product highlight the fact that the interest rate is at their discretion in Years 2 and 3.



Exactly. 



Brendan Burgess said:


> The odd thing about the ad in the Sunday Times is that it does not mention a rate.



Fair point that the advertisement does not mention the rate. I still think that BoI should be mentioning the fact that the rate on this 'fixed' product is at the banks discretion for 2 of the 3 years in their advertisements. 



Brendan Burgess said:


> I got the following statement from a spokesman for Bank of Ireland
> 
> Unfortunately, Bank of Ireland is bound by strict legislation on this product that does not permit us to fix or indicate the rates on this product for year 2 and 3. The specific legislation restricting this is contained in the Finance Act 2001, Section 7 (e) which states "(e) there shall not be any agreement, arrangement or understanding in existence, whether express or implied, which influences or determines, or could influence or determine, the rate (other than an unspecified and variable rate) of interest which is paid or payable, in respect of the relevant deposit or relevant deposits held in the account, in or in respect of any period which is more than 12 months" (page 150 on pdf).  Thus, while we are clearly meeting our obligations under CPC, we are bound and restricted by specific legislative conditions of this product.



Interesting, I was unaware that legislation prevented the fixing of rates beyond year 1 on medium/long dated DIRT free products. Strange that the NTMA are allowed do that with State Savings products but banks aren't. 

However, this point does not give BoI a green light to (1) put the product in their fixed term deposits section, (2) to state that there is a "fixed rate of interest" in the header description on the website and (3) to preclude to mention that the rate beyond year 1 is at the banks discretion in advertisements.



Bobby1 said:


> I have looked at this at great lengths for banks thinking of introducing the product, but most abandoned it when you read the mind boggling rules Revenue thought up of .



Interesting. The key point there is that banks are under no obligation to offer such a product if they have issues with the way Revenue have implemented rules around it. It is the banks choice to offer this product.


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## Brendan Burgess (28 May 2013)

Good coverage in today's Indo 



> BoI savings account "should be banned" - Burgess


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## Brendan Burgess (28 May 2013)

> However, this point does not give BoI a green light to (1) put the  product in their fixed term deposits section, (2) to state that there is  a "fixed rate of interest" in the header description on the website and  (3) to preclude to mention that the rate beyond year 1 is at the banks  discretion in advertisements.
> ...
> The key point there is that banks are under no obligation to offer such  a product if they have issues with the way Revenue have implemented  rules around it. It is the banks choice to offer this product.



The advertising for this is clearly in breach of the Consumer Protection Code in that many customers will be misled into thinking that they are getting this rate for three years. 

Bank of Ireland's treatment of customers with tracker mortgages in Ireland and, more especially, in the UK, makes it absolutely clear that they cannot be trusted with a product like this. They simply should not be offering this product.

If they do offer it, they must advertise it within the CPC guidelines. It should not mislead people into thinking that they are getting a fixed rate for the three years. 

If AIB is offering the same product, they should stop doing so as well.

Why did other lenders not offer this product?  Do AIB and BoI have a competitive advantage in attracting deposits, if the other banks refuse to offer it? 

They should campaign to get the government to change the rules and then offer a proper product.


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## Bronte (28 May 2013)

Did you complain to the CB?


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## Brendan Burgess (28 May 2013)

Bronte said:


> Did you complain to the CB?



No. Did you?


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## mercman (28 May 2013)

I do hope that this is brought to the attention of the Central Bank in mass. Unfortunately I'd say they will get away with this as of who they are. Animal Farm Irish style springs to mind.


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## Bronte (28 May 2013)

Brendan Burgess said:


> No. Did you?


 

Ah but you're at the forefront of leading the charge against shoddy practices by financial institutions and if you get a result you can get a press article about it.

On a more serious note, I won't be complaining as it does not affect me. And ordinary people will probably be on here in one years time when they realise they've been tricked into a false promise and ended up with practically zero interest.


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## dub_nerd (28 May 2013)

I have a five year term deposit with Bank of Ireland Private, and while I went into it with my eyes open there are some conditions that could be considered sneaky. The term is 5 years 1 month, so it didn't have to be covered by the ELG. It can be closed after four years at the bank's discretion (presumably if they feel they can get a better rate elsewhere and no longer need your money). The C.A.R. was calculated and advertised incorrectly. I brought it to their attention and said it didn't meet CB guidelines. They said the C.A.R. was calculated as if interest paid out annually was reinvested at the same rate... even though you can't make additional deposits in the lifetime of the product!


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## DrMoriarty (28 May 2013)

mercman said:


> I do hope that this is brought to the attention of the Central Bank in mass. Unfortunately I'd say they will get away with this as of who they are. Animal Farm Irish style springs to mind.


The Financial Regulator has spectacularly failed to protect consumer interests ever since it was created by Bertie and Brian in 2003. Why would anyone expect that to change now? I see the Central Bank have just re-appointed ex-director general Tony Grimes. On an undisclosed salary (it was €249K in 2010) _plus _his current €65K pension, apparently? Presumably what clinched the re-hire was his assertion back in 2010 (when he retired just ahead of the Nyberg report) that he could do nothing but sit back and watch while Neary blew up the Irish banking system.

Good times.


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## Brendan Burgess (28 May 2013)

Point taken lads, but please stay on topic - this thread is about the BoI product.


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## orka (28 May 2013)

There was a readers letter/query follow-up in the Irish Times Pricewatch section yesterday (can't find online link) about a BoI 40-day notice account; reader had complained a couple of weeks ago; got a 'lovely' letter back from BoI saying that the bank were in the right - see page 6 of the attached 10 pages of T&Cs - 'the bank reserves the right to change any of the terms or conditions at anytime'! Magnificent - why bother with any T&Cs if you have a catch-all 'we can do whatever we want at anytime' condition...


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## mercman (28 May 2013)

It really does appear that nothing has changed !!! To all reading this and whether customers of the named Bank in this case, please read all papers very thoroughly and if in doubt keep your money in your pocket. 

It really is a very sad day, where after six years of Banks not conforming to the rules of a very serious Consumer Code, here we have a display where an Irish Bank chooses to try and deceive deposit holders. 

To those that are effected by this lapse, it would be good guidance to report your grievance to the Regulator and Central Bank.


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## Lightning (28 May 2013)

dub_nerd said:


> I have a five year term deposit with Bank of Ireland Private, and while I went into it with my eyes open there are some conditions that could be considered sneaky. The term is 5 years 1 month, so it didn't have to be covered by the ELG. It can be closed after four years at the bank's discretion (presumably if they feel they can get a better rate elsewhere and no longer need your money). The C.A.R. was calculated and advertised incorrectly. I brought it to their attention and said it didn't meet CB guidelines. They said the C.A.R. was calculated as if interest paid out annually was reinvested at the same rate... even though you can't make additional deposits in the lifetime of the product!



What did the CB say?


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## Lightning (28 May 2013)

Response from Bank of Ireland on Boards.ie.

BoI are making changes. Some small progress in bold below.

Thanks for posting

The Special Term Account is a fixed term account to comply with the legislation governing Special Term Accounts. While the term is fixed, the rate cannot be fixed for the entire term as dictated by Section 264A (e) of the Taxes Consolidation Act, 1997 (as inserted by the Finance Act, 2001) which states "(e) there shall not be any agreement, arrangement or understanding in existence, whether express or implied, which influences or determines, or could influence or determine, the rate (other than an unspecified and variable rate) of interest which is paid or payable, in respect of the relevant deposit or relevant deposits held in the account, in or in respect of any period which is more than 12 months".

However, for customers who may be dissatisfied with the rate in Years 2 or 3, the Special Term Account may be closed, with no penalty from Bank of Ireland. However, the account will lose the Special Term Account status, which means that DIRT will be payable on the interest earned to that date.

(2) The product isunder the description "One option for such a lump sum deposit is a Fixed Term Deposit Account. It offers security for your money for the term chosen, with a fixed rate of interest". This is incorrect. The rate of interest is not fixed for the term. The real AER rate of interest is unknown when you choose your term and the rate of interest is not fixed for the full term.

*You arec orrect in pointing this "categorisation" error out. While we do have fixed term products with variable rates, the Special Term Account is not and cannot be categorised as "an account for the term chosen, with a fixed rate of interest". Thank you for pointing this out - Bank of Ireland will immediately display this product under a different category to ensure there is no ambiguity.*

(3) Theadvertisements that you have run for this product in the Sunday Business Post and Sunday Times yesterday failed to make the key T&C for this product clear. Why do the advertisements not clearly state that the rate of interest is not fully determined at account opening stage and the bank sets the rate for year 2 and year 3 at a rate of their choice? This is such an important criteria of the product. It should be made clear in the advertisements.

Because ofthe rate related restrictions prescribed by legislation, Bank of Ireland was restricted in publicising the rate on the advert as we would have been compelled to also state the AER, which, as you point out in your second comment, is 'unknown' as we cannot confirm the rates on Year 2 and 3. However, with best efforts, the advert was designed to highlight the core qualifying criteria for this account as required under the Consumer Protection Code. To qualify for a Special Term account, there is a minimum investment of €5K and customers must comply with the terms and conditions to benefit from the DIRT free exemption. The rate is not, in fact, a qualifying criteria.

(4) This whole product gives the feeling of entrapment. You lure the customer in with a high rate for year one and then pay them next to nothing for year 2 and year 3 but yet leave them locked for 3 years. It is trickery and entrapment. The Consumer Code has clear provisions against this kind of misleading product. I would encourage you to review this products compliance with the Consumer Code.

It isclearly not our intention nor is it our desire for customers to break out of the STA and as a consequence, it would make little sense for BOI to provide a year 2 rate that is adverse to prevailing market rates at this time. Bank of Ireland is meeting its obligations under the Consumer Protection Code, but is bound to adhere to the restrictions imposed on this account by specific legislation. However, as previously highlighted, customers who may be dissatisfied with the rate in Years 2 or 3, are fully entitled to remove their funds, with no penalty from Bank of Ireland, but they will lose the STA status. 

The SpecialTerm Account 3 year product offers an opportunity for customers to receive interest of up to €480 per annum DIRT free, which Bank of Ireland determined may be a welcome incentive for savings particularly as DIRT rates have increased significantly over the past 5 years and as deposit interest rates reduce in line with market rates.

We hope this answers your query.

Thanks

Billy


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## mercman (28 May 2013)

CiaranT, this is all very fine, but on a forum of not of any significant importance. These errors should be posted everywhere where the original advertisement was originally posted.

In the case of difference, it this had of occurred by a non-regulated financial entity or another smaller Financial Provider, there is a strong chance they would be barred or certainly restricted from trading in Ireland.

As with others. I would dearly love to know what stance the Central Bank takes of this ???


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## dub_nerd (28 May 2013)

dub_nerd said:


> I have a five year term deposit with Bank of Ireland Private, and while I went into it with my eyes open there are some conditions that could be considered sneaky. The term is 5 years 1 month, so it didn't have to be covered by the ELG. It can be closed after four years at the bank's discretion (presumably if they feel they can get a better rate elsewhere and no longer need your money). The C.A.R. was calculated and advertised incorrectly. I brought it to their attention and said it didn't meet CB guidelines. They said the C.A.R. was calculated as if interest paid out annually was reinvested at the same rate... even though you can't make additional deposits in the lifetime of the product!


 


CiaranT said:


> What did the CB say?


 
I didn't report it to the CB, merely read their guidelines. I understood myself how the rates worked, however BOI presented them, so I wasn't too fussed at the time.


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## Brendan Burgess (28 May 2013)

mercman said:


> In the case of difference, it this had of occurred by a non-regulated financial entity or another smaller Financial Provider, there is a strong chance they would be barred or certainly restricted from trading in Ireland.



Let's not go completely over the top. 

Very few financial services providers have been barred or restricted. I would very much doubt that the description of this product would merit anything other than a "quiet word" from the CB to describe it properly.

They  _might _tell BoI to write to all the customers who already have the product to highlight that the rate is not fixed in Years 2 and 3 and to give them the right to cancel the product.


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## mercman (28 May 2013)

But if not for CiaranT and AAM, this would have probably gone unnoticed and unchecked for some time. Not to commence a difference with you, but I do believe that providers barred or restricted in the main leave clients short of their funds. In this case the eventual outcome would have been similar.

And this was no mistake. It looks like a deliberate effort to portray a product which it simply wasn't.


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## Bronte (29 May 2013)

orka said:


> a 'lovely' letter back from BoI saying that the bank were in the right - see page 6 of the attached 10 pages of T&Cs - 'the bank reserves the right to change any of the terms or conditions at anytime'! Magnificent - why bother with any T&Cs if you have a catch-all 'we can do whatever we want at anytime' condition...


 
Yikes to that.  You cannot win any which way.


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## Lightning (22 Jul 2013)

AIB have made a decision to pull their similar version of the BoI product for new customers. 

AIB have closed their "Special Term" product today that offered a variable rate for a fixed period. 

Good to see AIB make the right decision. 

Meanwhile, BoI continue to advertise that their "Special Term" product, I saw a fresh advertisement for it today, as allowing no withdrawals during the term but yet BoI, as per the above, tell customers otherwise.


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## rayn (22 Jul 2013)

This warning re 3 year accounts has been on your Key post for a number of months. You warn to ask for the "growth" product.


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## Gerry Canning (23 Jul 2013)

Brendan and others mention Consumer Protection Codes that are underpinned (supposedly) by our Central Bank.
As an opinion, I do not trust Central Bank to police the Code. I do not believe they will enact Hard Sanctions for breeches of the Code.

In relation to our Banking Friends
The Consumer Protection Code 2012 under GENERAL PRINCIPLES state that Banks MUST,

{2.1 acts honestly,fairly and professionallyin the best interests of its customers and the integrity of the market; 
2.3 does not recklessly,negligently or deliberately mislead a customer as to the real or perceived advantages or dis advantages of any product  or service;
2.6makes full disclosure of all relevant material information ,including all charges in a way that seeks to inform the customer} 

If the Banks have done this , there is no problem.
If they havn,t ,they either do not knowthe Code or know it won,t be enforced.
Take your pick?


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## Lightning (23 Jul 2013)

rayn said:


> This warning re 3 year accounts has been on your Key post for a number of months. You warn to ask for the "growth" product.



Yeah, exactly. I added "Growth" to the top of the best buys post to try and make it clear that one should go for the "Growth" 3 year product and not the "Special Term" 3 year product.


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