Complaint over TV advert for Kiwibank's 'no-term deposit' claims it's 'contradictory' as money is locked up for 32 days

Complaint over TV advert for Kiwibank's 'no-term deposit' claims it's 'contradictory' as money is locked up for 32 days

By Gareth Vaughan

The Advertising Standards Authority has thrown out a complaint over a television advertisement for Kiwibank's ground breaking Notice Saver product, or no-term deposit, that features actor Sam Neill.

Launched last October and touted as the first no term deposit offered by a New Zealand bank, the Portfolio Investment Entity (PIE) compliant Notice Saver offers interest at 5.00% per annum and requires a minimum deposit of NZ$2,000. Savers can withdraw some, or all, of their money by giving Kiwibank 32 days notice. Kiwibank CEO Paul Brock told in late November that Notice Saver had attracted "several hundred million dollars" from savers with much of the money coming from other banks.

The advert features a Kiwibank car with big chains wrapped around it. A voice-over says: “For too long New Zealanders have been shackled by term deposits that are harder to get out of than a muddy paddock and loose gumboots. And savings accounts that pay, well, peanuts. Well not any longer..”.

As the chains around the car break away, the voice over continues: "Announcing a Kiwi first. Kiwibank Notice Saver. Unlike other banks you can get higher returns on your savings without them being locked away. To access some or all of your money just give us notice. We reckon it’s worth moving banks for, especially the one you already own.”

On screen text reads: “32 days notice. Maximum investment NZ$2,000.”

The complainant, a J. Randall, said: “I may be wrong, but feel that the current advertisement for a savings account offering a high rate of interest with the person talking emphasising that 'your money is not locked in like other high interest accounts, and that you only need to give them some notice to get your money out,' is contradictory as people need to read the statement at the bottom of the ad that tells them they need to give 32 days notice to withdraw."

Randall argued that surely that means a customer's money is locked in for at least 32 days. The complaint was made under Basic Principles 2 and 3 of the Code for Financial Advertising.

The Advertising Standards Authority said Kiwibank was entitled to impose certain terms and conditions around the offer so long as the bank didn't significantly diminish the offer's value.

"The purpose of the advertisement was to promote the idea that the consumer was not 'locked in' if they signed up to the product on offer," the Advertising Standards Authority said.

The 32 day notice period was "a reasonable condition" to impose on the consumer and was clearly stated in the advertisement for people to read.

Therefore the advert was deemed to not have breached the Code for Financial Advertising and the complaint was dismissed. See the full complaint here.

See a video of the ad hosted on Kiwibank's site.

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So while the bank holds your money for a further 32 days, who claims the interest over that time? Do you as a saver still recieve a interest payment for that 32 days or nothing? What if any fees are paid also for ending the Term?

You still earn interest on your money after you have given notice. A great account as i have one. Beat those aussie banks weak savings accounts. Only fee is if you need the money out sooner than the32 days notice period.

Ok, so.............what's the fee Tranny? Not all the interest earned then forfeited in that 32 day period is it? Or is it a one off fee like $50 or something. I should know this as I'm with KB but.........Id rather hear it from someone like yourself

From what i can make out on this account the fee for early withdraw of the funds from the account is the amount of interest you would have got for the month. So not a straight forward $50.00 or $100.00 but more of a formula base eg $ x % divided by 365 x 32. So for $1000.00 early withdrawl would be $1000.00 x 5% divided by 365 x 32 = $4.38 fee. I like this account however it may not be for everyone if they need the funds straight away, where a simple savings account may be better suited or a mix of savings and this account perhaps.

"I like this account however it may not be for everyone if they need the funds straight away, where a simple savings account may be better suited or a mix of savings and this account perhaps."


Yeah, but wasn't this exactly the problem this guy J Randall had with it? He felt their was a penalty or "shackle" that still applied, therefore false advert?

Yeah but the ad clearly stated the notice period. The simple fact is people have choices that they can make. Accounts like this will either suit them or not. If it does then great if not them their are other choices. In this PC world we live in people don't want to be responsible for their own decisions and prefer to waste peoples time complaining about thing, hence why the  The Advertising Authority threw out his complaint.

What's up with J Randall? I wonder if he works for ANZ, or if he's just some nutjob ideologue.

It's quite apparent on the ad that you need to give 32 days notice. It's even called the "Notice Saver". Thirty-two days is nothing compared to the 3 years you'd need to lock your cash away to get a similar interest rate.

I've moved nearly all of my call account funds from Rabo into this account. Rabo offers 4% P.A., Notice Saver offers 5% and it's taxed as a PIE. So my money is earning more than 25% of what it would be in Rabo. At the moment with Notice Saver every $10,000 invested gets you about $1/day in net interest.

Obviously, if you're going to need the cash with less than 32 days notice this isn't the account for you. At the beginning of each month I ensure that I have a pending withdrawal with enough to pay for my credit card bill. This way I can put more of my job income into this account without having to worry about maintaining a balance in my cheque account.

You'd be a fool not to have any money in more liquid accounts, but why forgo the extra interest for the cash you don't touch?

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