412 the gross rate of the original investment, unless a leap year applies. The text of the
413 advertisement should make this clear when describing the basis on which AER is
414 calculated for short-term deposits.
416A5 AERs are to be rounded and displayed up to two decimal places.
418A6 Where the AER varies according to the date of the deposit (for example, where
419 an unconditional bonus is offered until a fixed calendar date or a different
420 gross rate applies for deposits received on application pending investment
422 • All advertising should include a statement that the AER assumes that investment was
423 made on a specified date.
424 • The date specified should be:
425 o relevant to the date the advertisement or literature will appear or be available
426 and not more than 1 month away from that date.
427 o for deposits where a different gross rate applies for money received on
428 application pending investment into the product – the specified date should be
429 that which the provider first expects to receive funds from customers.
430 • Advertisements showing a recalculated AER will need to be amended on a monthly
431 basis, unless the recalculated AER would be higher than the originally advertised
432 rate. (This allows providers some operational flexibility regarding the updating of
433 advertisements where a short-term period of underquoting AER can be justified given
434 the operational benefits).
436A7 Where regular monthly savings products are advertised which have a limited
437 life of one year and interest is only credited once a year the AER should not
438 take account of any interest earned after the account matures. The AER is
439 deemed to be the same as the nominal rate for the account.
4441. If an account pays or credits interest once a year, then the AER is equal to the
447In this simple case of a single deposit of £100 at the beginning of Year 1 and interest of 10%
448payable at the end, the formula reduces to:
454 £100 1+ = £100 1+ ( = £110 )
459and clearly is 10, and the AER is 10.00%, as you would expect.