ASA Adjudication on Matalan Retail Ltd

Ad

An e-mail from Matalan stated "Your home in the sun for just £22.49 a month - less than your holiday!" in the subject line. The ad stated "Own your property abroad for less than your holiday - Now the holidays are here we're sure you can't wait to get away with the family but why spend so much on your holidays every year when you can own a place in the sun for less." A link entitled "Here's how!" took recipients who clicked on it to screens that described how the arrangement worked in more detail and which referred to, among other things, the two-week period customers had purchased. The e-mail then showed two columns headed "Holiday in Spain Vs Holiday home in Spain." Text in the columns stated "A 2 week holiday for 4 - You pay £86,055 over 15 years" and "A 2 week equity share - You pay £23,650 over 15 years" respectively. Further down, the ad showed photographs of properties in Turkey and Spain. Text alongside the first photograph stated "Own from £22.49* a month - You can earn £10,578**" "Own" figures of £33.84 and £58.65 and "earn" figures of £17,896 and £20,054 respectively appeared alongside the other properties. The "earn" figures were linked by asterisks to footnote text that stated "Earnings are calculated at an annual 7% growth rate and are not guaranteed. Property values can go down as well as up."

Issue

1. A recipient challenged whether the claim "Own your property abroad ..." and similar was misleading.  She understood that purchasers bought a two-week slot for 15 years, after which the property was sold.

2. The recipient also challenged whether the ad exaggerated the profit purchasers could expect to make when the property was sold.

CAP Code (Edition 11)

Response

1. Home Shared Ownership responded on behalf of themselves and Matalan.  They said that, if the ad was found in breach of the Codes, they were willing to take steps to amend future ads so that they did not breach for the same reasons.  They said purchasers were collectively the owners of the property, the title to which was held in trust for their sole benefit.  They said owners agreed to sell the property on the open market after 15 years and would realise the entire proceeds of the sale jointly.  They did not believe the fixed ownership period undermined the concept of ownership.  They said that, with traditional timeshare arrangements, for instance, purchasers had a contractual right to use the property but the operator of the resort usually retained ownership and usage benefits expired with expiry of membership.  They did not believe anyone would be in a position to make a commitment to purchase without having understood the proposition.

2. Home Shared Ownership said the properties would be disposed of on behalf of the owners after a fixed period of 15 years to achieve the best price relative to the open market valuation at the time.  They said that, although they stated in the ad that property prices could rise and fall in line with market conditions, their analysis of the UK property market confirmed that, historically, property would always appreciate in value to at least the rate claimed over a period equivalent to the duration of the scheme.  They said they did not claim the rate of increase was guaranteed but that it was intended to give purchasers a guide to potential return.  They said data relating to the Turkish property market showed that it had achieved strong growth and out-performed the UK market for the last three years.  They said figures for the area in Spain where their properties were situated showed an annual growth rate of between 10.6% and 11% over the last 15 years.  Home Shared Ownership provided data from property and investment consultants relating to the housing market in Turkey and information on the Spanish housing market, taken from figures issued by the Spanish government, which they believed supported their claims.

Assessment

1. Not upheld

The ASA noted that photographs and text that followed the statement "Own your property abroad for less than your holiday ..." stated that the comparison figures compared "A 2 week holiday for 4" with "A 2 week equity share" and that the ad contained a link to full details of the arrangement on the advertiser's website.  Because the ad explained what the concept of "ownership" was based on, we considered it was unlikely to mislead.

On this point, we investigated the ad under CAP Code clauses 7.1 and 7.2 (Truthfulness) but did not find it in breach.

2. Upheld

We noted that the CAP Code required ads for investment products to state that the value of investments, unless guaranteed, could go down as well as up and that past performance or experience did not necessarily give a guide for the future.  We noted that footnote text stated "Earnings are calculated at an annual 7% growth rate and are not guaranteed" and "Property values can go down as well as up" but considered, however, that the more prominent and less cautiously worded claims that began "You can earn £X" contradicted the footnote text and suggested that, nevertheless, purchasers were likely to experience similar growth.  Although Home Shared Ownership had provided data that showed the historical position on which their claims were based, we considered it was not possible to suggest with certainty that returns that were not guaranteed would follow a historical pattern.  We therefore concluded that the claims were misleading.

On this point the ad breached CAP Code clauses 3.1 (Substantiation), 7.1 and 7.2 (Truthfulness) and 53.5 and 53.6 (Financial products).

Action

The ad must not appear again in its current form.  We welcomed Matalan and Home Shared Ownership's willingness to amend their ad.  We told them to amend their ad so that it did not make definite claims for the future based on historic data when it was not known that future growth would continue in a similar way.

Adjudication of the ASA Council (Non-broadcast)