Financial

The advertisement on the advertisers’ website stated the following:

“10 Year National Solidarity Bond
If you have a lump sum to save for a long period, our 10 Year National Solidarity Bond is a risk-free and straight forward way to save, offering the highest return of our products.”

The complainant objected to the product being advertised as risk free and considered this was incorrect.

He considered that while the bond was underwritten with a State guarantee, it still had an element of risk linked to the creditworthiness of the State. The complainant said that in finance, treasury bonds were sometimes referred to as risk free but that this was purely theoretical and that in reality all financial investments had risk. He considered the bond should be referred to as ‘low risk’, not ‘risk free.

The advertisers said that State Savings fixed term products, including National Solidarity Bonds (NSBs) were of the same quality as a Government bond being a direct, unconditional obligation of the Irish state and not just guaranteed by the State. They said that it was on this basis that the NSBs were advertised as “risk free” and “100% protected by the State”.

The advertisers said that while they acknowledged the theoretical point made by the complainant that State Savings products were linked to the creditworthiness of the State, they said that the Irish Government had not defaulted on repayment of any debt obligation since the founding of the State, including during the financial crisis. They said that accordingly, they believed the theoretical risk identified by the complainant to be remote and in such circumstances, were of the view that to describe the NSBs as “low risk” may be misleading in itself as it might suggest to people that there were other risks associated with their investment in NSBs of which they should be aware, and that this was not the case.

Complaint not upheld.

The Complaints Committee considered the detail of the complaint and the advertisers’ response.

The Complaints Committee noted the response that the advertised product in question had the same quality as a government bond being an unconditional obligation of the State and, on that basis, as being “risk free” and “100% protected by the State”. The Committee further noted the response that the Irish Government had not defaulted on repayment of any debt obligation since the founding of the State, including during the financial crisis.

In the context of the Code requirement that the objective truth of the advertising claims must be substantiated, the Committee considered that adequate substantiation had been provided, particularly given the State’s proven debt repayment performance over the course of circa one hundred years. They considered, therefore, that the claim concerned was not in breach of the Code.

ACTION REQUIRED:
No further action required.