ASA Adjudication on Nationwide Building Society

Ad

A TV ad, for mortgages from the Nationwide Building Society (Nationwide), showed a man and woman organising their mortgage with an advisor. The man said to the advisor: "We were just wondering what this £2000 charge was?" and the advisor responded "That's the HLC". The woman then asked "what does that stand for?" The advisor said "Well what do you think it stands for then eh? Handful of Loose Change? Have a Look at my Computer? ... ". The man then said "Will you just tell us what it is" and the advisor replied "all right, it's the Higher Lending Charge. You have to pay it if you've got a small deposit". The woman then said "£2000, I'll think you'll find were Hastily Leaving Cust ...". The voice-over then said "At Nationwide we don't make you pay a Higher Lending Charge however small your deposit ... " and showed the man and woman then walking into a branch of the Nationwide which had the claim "Mortgages with no Higher Lending Charge" in its window.

Issue

A viewer challenged whether the ad was misleading, because he understood that people with deposits of less than 10% were charged a higher interest rate and believed this to be a HLC by another method. He believed consumers might pay less overall by taking a mortgage from a company that charged a HLC than by paying a higher interest rate charged by Nationwide, and that the ad, therefore, was misleading by omission.

BCAP TV Code

Response

Nationwide explained that a HLC was defined by the Financial Services Authority (FSA) as "a fee charged by the mortgage lender where the amount borrowed exceeds a given percentage of the value of the property". They said they did charge a higher interest rate for borrowers who borrowed a high percentage of the value of their property, but explained that this was completely separate from the HLC, which was a specific additional fee. They provided a comparison table of their closest competitors that showed some of them charged a HLC as well as a higher interest rate mortgage. Nationwide said they believed their ad was not misleading, because the message of the ad, which was that they did not charge a HLC, was true.

The Broadcasting Advertising Clearance Centre (BACC) said they did not believe the ad was misleading and reiterated Nationwide's comments that a HLC was distinct and different from charging a higher rate of interest to borrowers.

Assessment

Not upheld

The ASA understood that the HLC was separate and distinct from charging a higher rate of interest to borrowers with little or no equity in the property that they were purchasing. However, we acknowledged that the viewer was correct in that a customer may end up paying less overall by taking out a mortgage that charged a HLC, but with a lower interest rate. We nevertheless considered that Nationwide had shown that they did not charge a HLC in situations where some other lenders did and, because of that, we concluded that the ad did not mislead.

The ad was investigated under CAP (Broadcast) TV Advertising Standards Code rules 5.1 (Definition of misleading advertising), 9.3 (Finance and investment - Misleading advertising) and 9.8 (Finance and investment - Lending and credit), but not found in breach.

Action

No further action necessary.

Adjudication of the ASA Council (Broadcast)