Banks Misleading The Depositors

The Competition Commission of Pakistan passed an order on Friday against four banks for the misleading advertisements regarding higher returns on deposits. The order also said that the advertisements could harm business interests of other undertakings by luring customers away from them.

Salient features of the order are;

Banks which voilated section 10 of the Competion Ordinance include

• Askari Bank Limited
• Habib Bank Limited
• My Bank Limited and
• United Bank Limited

This section prohibits deceptive marketing practices and, among other things, providing false and misleading information to consumers.

The CCP had taken notice of these banks’ advertisements about deposit accounts and associated profit rates.

The CCP had issued show-cause notices to the banks and the bench, after the hearing, held that the advertisements were deceptive because these did not specify the basis of the calculation of the expected rate of return.

The advertisements did not disclose consequences of early withdrawal from such deposit accounts and carried important information in small print.

The CCP order referred to the Truth in Savings Act of the United States, which listed different requirements to be followed when advertising financial goods or services.

After the banks submitted undertakings that they would comply with the directives of the commission, the CCP did not impose any penalty on the banks because they had agreed to withdraw the advertisements.

The CCP order, however, warned the banks that future violations would carry serious consequences, and said that it should serve as guidelines for all banks and other undertakings concerned.