ASA Adjudication on Stanley Gibbons (Guernsey) Ltd

Ad

A magazine ad for Stanley Gibbons, a stamp dealer, stated "Enter the rare stamp & autograph investment market... WITH GUARANTEED RETURNS AND HIGH-YIELD POTENTIAL ON SOME TRULY FASCINATING ITEMS ... Guaranteed returns of up to 6% p.a.* with an unlimited upside GUARANTEED MINIMUM RETURN CONTRACTS* The Guaranteed Minimum Return Contracts allow you to invest for a fixed period of between 3 and 20 years enjoying a guaranteed minimum return for each year of the contract ...". The asterisk was linked to text that stated "*Subject to terms and conditions".

Issue

Mr Philip J Milton of Philip J Milton & Company plc, independent financial advisers, challenged whether Stanley Gibbons could substantiate the claims "Guaranteed returns of up to 6% p.a.* with an unlimited upside" and "GUARANTEED MINIMUM RETURN CONTRACTS*".

CAP Code (Edition 11)

Response

Stanley Gibbons explained that none of the Guaranteed Minimum Return Contracts had expired yet, because they had started offering them two and a half years ago and the minimum contract term was three years.  They sent a copy of a client contract.

They stated that the contracts were legally binding between Stanley Gibbons and individual clients.

Assessment

Not upheld

The ASA noted the contract stated that, on expiry of the contract period, the investor had the option of selling the stamps to Stanley Gibbons for a price equal to the repurchase price.  The repurchase price was defined as the total price the investor had originally paid for the stamps, plus a sum equivalent to simple interest at the rate of 6% per year for the contract period.

We noted the contract was legally binding.  Although none of the contracts had expired yet, we considered we had no reason to suspect the guarantee would not be honoured at the end of the contracts fixed period.  We concluded that the claims "Guaranteed returns of up to 6% p.a.* with an unlimited upside" and "GUARANTEED MINIMUM RETURN CONTRACTS*" were unlikely to mislead.

We investigated the ad under CAP Code clauses 3.1 (Substantiation), 7.1 (Truthfulness) and 17.1 (Guarantees) but did not find it in breach.

Action

No further action required.

Adjudication of the ASA Council (Non-broadcast)