A single-member bench of the CCP passed an order on 15th January against four banks - Askari Bank, Habib Bank, MyBank and United Bank - for indulging in deceptive marketing practices by providing false and misleading information to customers and violating Section 10 of the Competition Ordinance. The action was basically taken against the advertisements issued by the four banks in the print media.
Through these advertisements, these banks had announced different terms and variously expected rates of return to account holders without disclosing consequences of early withdrawals from such deposit accounts and carried some important relevant information only in small print.
Relying on a precedent from the US, the bench also referred to the Truth in the Savings Act of the United States, which lists different requirements to be followed when advertising financial goods and services. It was also stressed that the advertisements of the banks were capable of harming the business interests of other undertakings by luring customers away from them.
The order further stated that any advertisement, which falsely asserts a claim, whether that claim is made up-front or is implied, is deceptive and misleading. However, after the banks submitted undertakings that they would comply with the directions of the commission and withdraw the advertisements, the CCP took a lenient view. It issued only a warning.
The fact that the CCP had taken a suo motu notice of the advertisements and its action was timely, and in a way quite pro-active, could only be appreciated. Under the law, the CCP is a federal body charged with the responsibility of ensuring fair competition in all spheres of commercial and economic activity in the country. A specially designated office of Fair Trading of the Commission looks into allegations of deceptive marketing practices.
In our view, the order of the CCP against the four errant banks would convey the right message to banks and go a long way in ensuring that all the information is honestly and comprehensively disclosed to the clients. However, while this would prove as a deterrent to the financial community, the case should also serve to alert the consumers of goods and services that they also need to demand full information and be careful while dealing with the providers of goods and services.
In the instant case, the problem seems to have basically arisen from the intense competition within the banks to mobilise an increasing proportion of deposits from a limited pool of depositors. The competition seems to having grown to an extent that minor violations of fair play have come to be accepted as normal and nobody looked at such activities disapprovingly. The CCP has, of course, done the right thing but it has also to strike a delicate balance between ensuring a rigid compliance of the rules and facilitating proper environment for commerce and industry which is free from unnecessary interference and harassment.