1023. Advertisements which quote a rate of interest must quote the AER and either the Gross
103Interest Rate or the tax free Rate depending on the product. e.g. the AER and the tax free
104Rate should be used for Cash ISAs. No rate or return shall be given greater prominence
105than the AER. For illustrative purposes, advertisements may also include an AER including
106conditional bonuses. However, this rate must be given the same prominence as the Gross
107Interest Rate and the AER and must be described as "AER including conditional bonuses".
108Where Gross Interest Rates are quoted on the basis of other than a 12 month period, this
109must be clearly stated. Where an interest rate is calculated on a basis other than actual/365,
110the basis should be stated and the AER should nonetheless be calculated on an actual/365
113“Actual/365” means that interest is calculated by taking the balance multiplied by the annual
114interest rate divided by 100, multiplied by the number of calendar days that the balance is
115held, divided by 365 in a normal year or by 365 or 366 days in a leap year. If making an
116adjustment for AER purposes, the divisor should be 365 in all years.
118Because the AER will be the one rate that customers will be able to use to compare all
119products, it must be given equal prominence as the Gross Interest Rate (i.e. the gross or tax
120free rate). However, if the AER is exactly the same as the Gross Interest Rate, there is no
121need to quote the same rate twice - it is enough to state, for example, "5% gross/AER".
123An AER including conditional bonuses (paid, for example, if the customer makes only a
124certain number of withdrawals each year) can only be included if the AER is also quoted and
125given the same prominence.
1274. Advertisements which quote a rate of interest must contain the following specific
130 a. the frequency of payment of interest.
132 • a statement that the Gross Interest Rate is fixed for any specified term; or
133 • a statement that the interest rate is subject to variation.
134 c. the minimum amount which must be deposited and/or the number of withdrawals
135 which must not be exceeded to achieve the advertised rate of interest.
137This provides that, if a rate of interest is quoted in an advertisement, the advertisement must
138also state how often interest will be paid (for example, monthly, annually or after five years);
139whether the interest is fixed or variable (if fixed, the term must be stated); and any minimum
140deposit necessary. The information in 4a and 4b is not required to be contained in any
141particular part of the advertisement. However, institutions should take care to ensure, in
142respect of printed advertisements, that any footnotes are clear and legible. The information
143required under 4c must be prominent and displayed in the main part of the advertisement.