Banks Advertising Will Be Complete
09 May, 2013
Banks Advertising Will Be Complete
TV commercials of Georgian commercial banks must include thorough information about the advertised product not to mislead consumers. Georgian Central Bank gave a fortnight to commercial banks to streamline their advertising clips, specifically the TV commercials to make them complete.
“Recently, the discounts and special offers on the consumer’ credits made by commercial banks reached undesirable scale, reflected by the ambiguous and misleading information provided by the advertisements. Along with the fact that this significantly harms consumers’ interests, it also
carries a serious reputational risk both for separate banks and for the banking sector as a whole,” Giorgi Kadagidze, Governor of Georgian National Bank (NBG), stated during his meeting with the representatives of Georgian commercial banks on April 30, 2013. According to Kadagidze, Georgian banks in pursuit of aggressive competition offering became misleading in advertising campaign for their ads may contain only half of information or create wrong expectations. Actually that Georgian banks have been practicing half-information in their advertisements is no novelty to Georgian consumer but the recent advertising campaign of bank VTB Georgia touring credits for 8% that actually reached 14.75% bewildered consumers, Georgian financial analysts say. And although Kadagidze did not personified any mischief bank he accentuated that the seriousness of this issue is attested by frequent calls from discontented consumers to the NBG’s hotline as well as the negative comments on the current offers in the social networks. Kadagidze did not rule out making advertising law stricter and gave a fortnight to banks to make their advertising complete and include real interest rate by all means.
“The law needs no more restrictions, it needs to be implemented,” Lia Eliava, a financial analyst, said. “Advertising law already prohibits spread of misleading information to all businesses including banks. However NBG turned a blind eye to it for years. Let’s take credit unions offering deposits. The point is credit unions simply are not authorized to keep deposits unless the depositor becomes a member of this credit union but nobody has ever punished them for half-truth. And this recent VTB ad was beyond all limits, the real interest rate for their advertised credit is no less than 14.75%, that’s it. No other bank has ever advertised such confusing lie.NBG had to personify that VTB was a mischief.”
Zurab Gvasalia, President of Association of Georgian Banks, finds VTB innocent and the NBG’s recent requirements quite in compliance with its policy.
“Putting full credit-related information in the advertisement is very difficult for real yield coefficient is calculated to each client individually. Banks most probably will need longer ads, new marketing policy and more finances to spend on. They already work to meet the requirements,” Gvasalia said in the interview to Georgian Journal. “AS to the VTB it should not be referred as the reason to the changes. VTB really offers 8% for the advertised credits in question. And the NBG does nothing new, it started stronger consumers’ rights protection policy a year ago and this here stronger advertisement monitoring is just a follow up of this policy.”
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