Paragraph 31 INTEREST RATES
Rates of interest shall not be advertised unless they are described appropriately; the following terms should be used—
“Y% gross”;
“Z% compounded annual rate”
Where—
is the contractual rate of interest payable not taking account of income tax; an explanatory phrase conveying this meaning must be used to qualify the rate quoted.
The depositor must also be informed that although the interest is paid gross it is liable to tax.
is the rate equivalent to a “gross” rate annualised to take account of the compounding of interest paid other than once a year; an explanatory phrase conveying this meaning must be included if the “compounded annual rate” is quoted. “CAR”, following a percentage rate, is acceptable as the abbreviation of “compounded annual rate”. A “CAR” must not be quoted without the relevant “gross” rate. A “CAR” must not have greater prominence in size or type or otherwise than the other rate quoted. The rules for calculation of compound annual rates are set out in the Supplement to the Code.