ASA Adjudication on National Savings and Investments
National Savings and Investments t/a
1 Drummond Gate
11 July 2012
Internet (on own site)
Number of complaints:
The home page on National Savings and Investments website www.nsandi.com included the text "Need a secure way to invest? Your money is safe with NS&I. We're backed by HM Treasury, so all the money you invest is 100% secure. Always".
The complainant challenged whether the claim "100% secure" was misleading and could be substantiated, because they understood that incidents of fraud had resulted in a loss that had not been repaid.
CAP Code (Edition 12)
National Savings and Investments t/a NS&I (NS&I) stated that the claim on the website that they were 100% secure referred to the fact that they would always be able to repay a customer's investment in full without any interest no matter how much that customer had invested because, unlike other commercial banks and financial service providers, they were not limited to the guarantee offered by the Financial Service Compensation Scheme (FSCS) but were backed by HM Treasury. They stated that NS&I were an agency of HM Treasury which was part of the UK Government. They said the UK Government had historically never defaulted on a loan payment and had always held their triple A rating. They further explained that the UK Government would also continue to have tax raising powers and their products were therefore 100% secure.
They stated that between December 2010 and November 2011, 64% of fraud cases did not result in a reinstatement but explained that fraud cases were frequently opened by NS&I because of suspicious transactions that were later found to be genuine or where allegations of fraud were later found to be unsubstantiated. They explained that NS&I had an obligation to its customers and their tax payers to ensure that they re-instated every fraud case where a customer had been a victim, but also to ensure the claim was valid and where appropriate and possible, losses were recovered and police investigations were carried out. They stated that the majority of fraud was down to customer negligence such as accidentally or inadvertently making their holding details known to someone else, or a forged signature, but that they would not be aware of this unless someone reported it and that it was not internal fraud or the lack of control or processes on their part. They stated that NS&I had in place numerous online security measures and a rigorous authentication procedure, in common with other financial service providers, especially for their products that could be managed online. They explained that this included a unique account holding number, a unique NS&I number, a password and an answer to a unique question selected by the customer. They explained that this process was secure providing the individual kept the information to themselves.
They stated that they were continually reviewing their processes and procedures to ensure that they did all they could to protect their customer's investments and this was reflected in the year on year reduction in actual net fraud losses for the period in question. They supplied details of the specific amounts of loss through fraud over a two-year period which demonstrated a 50% year on year reduction in the amount of money lost through of fraud.
The ASA noted the complainant had understood from a Freedom of Information (FOI) request that there had been an increase in confirmed cases of fraud during 2011 and that in confirmed cases of fraud refunds had not been made by NS&I. The results of the FOI request showed that whilst the NS&I loss had reduced by 50%, the number of confirmed fraud cases had in fact increased from 81 in 2010, to 111 in 2011. We noted NS&I's comments about their policy for refunding incidents of fraud and understood that whilst fraud was potentially a realistic threat to NS&I customers, in the vast majority of cases a consumer's investments would remain secure.
We considered that the average consumer would interpret the claim that investments with NS&I were "100% secure" within the context of the previous part of the sentence which stated "We're backed by HM Treasury …" and therefore as a claim that the amount of money invested by consumers would be available to be returned without loss because it was backed by HM Treasury. We therefore considered that within the context of the security outlined in the marketing claim, NS&I had demonstrated that customer investments were secure
We therefore concluded that the claim "100% secure" had been substantiated and the ad was not misleading.
We investigated the ad under CAP Code (Edition 12) rules 3.1 (Misleading advertising) and 3.7 (Substantiation) but did not find it in breach.
No further action required.