ASA Adjudications

Yourclear Ltd
Bridgewater House
Surrey Road
Nelson
Lancashire
BB9 7TZ
Number of complaints: 1
Date:18 April 2007
Media:Television
Sector:Financial
Agency:The Gate Marketing & Design Limited

Ad
A TV ad, for Yourclear Ltd, claimed "you might not know it but there are friendly people who will advise for free on how to deal with your debts, without more loans.  In many cases they can help you to pay an affordable amount for a maximum of 60 months, with up to 75% of your debts written off, leaving you debt free".  On-screen text stated "An IVA should only be considered in extreme circumstances.  It is a formal legal agreement supervised by an insolvency practitioner.  Failure to adhere to an IVA could result in bankruptcy.  Your credit rating may be affected.  Subject to circumstances and acceptance.  This includes Scottish Trust Deeds".
Issue
Debt Free Direct Ltd challenged:

1.  whether the claim "up to 75% of your debts written off, leaving you debt free" was misleading and could be substantiated, because they believed the claim exaggerated the amount that most consumers were likely to be able to write off and

2.  whether the ad was misleading, because it did not make clear the fees payable under the terms of an Individual Voluntary Arrangement (IVA).
BCAP TV Advertising Code: 5.1;5.2.1;5.2.2;5.2.3

Response
1.  Yourclear Ltd (Yourclear) said the ad invited anyone with problem debt to call them for free advice.  They said callers received detailed advice and were offered a range of options to resolve their debt that also included bankruptcy for more serious cases.  They explained that, if they considered an IVA was the most suitable option for a debtor, they referred the case to a licensed Insolvency Practitioner who would then negotiate and supervise the IVA independently.  They sent a list of cases from November 2006 to January 2007 in which creditors had accepted a dividend of 25p in the pound from the four Insolvency Practitioners to who Yourclear referred clients, and also a graph that showed the spread of dividends accepted by creditors from those Insolvency Practitioners since November 2006.

Yourclear pointed out that the ad stated that "up to" 75% of debt could be written off and that on-screen text stated IVAs were "Subject to circumstances and acceptance".  They pointed out that no minimum dividend was enforced in law and that 25p in the pound was a typical minimum only, that depended on the operating methods of individual Insolvency Practitioners.

The Broadcast Advertising Clearance Centre (BACC) said they had accepted the claim "up to 75% of your debts written off" because they understood that, for many debtors advised by Yourclear, an IVA was the most suitable option.  They understood that debtors paid at least 25% of their debt in an IVA and that up to 75% of the total amount of debt could be written off.

2.  Yourclear said they offered a debt advice service and recommended a range of options to clients including IVAs but also bankruptcy, informal debt management, re-mortgage, full and final settlement or self help.  They pointed out that they were not an IVA provider, but accepted that the BACC had treated them as one because of the claim "up to 75% of your debts written off".  They pointed out that they had included on-screen text about IVAs, but argued that it was impossible to make consumers aware of every implication of all debt solutions in a TV ad.  They argued that, because fees were taken out of the debtor's repayments by the Insolvency Practitioner, the creditors bore the costs of IVAs.  They said debtors never paid more than their calculated disposable income each month for the 60-month term of the IVA.  They pointed out that details of how the IVA was paid for were clearly explained to the debtor by Yourclear staff and then by the Insolvency Practitioner when an IVA was arranged and that details of fees were stated in the proposal signed by the debtor before it was put to creditors.  They said the amount charged depended on the Insolvency Practitioner to whom the debtor was referred and on the debtor's circumstances.  They argued that the ad was not misleading because it did not imply fees would not be charged and viewers would understand that formal legal agreements like IVAs would involve fees.
Assessment
1. & 2.  Upheld
The ASA noted that Yourclear offered a range of options to clients, but that the on-screen text referred to IVAs only.  We noted that the claim "up to 75% of your debts written off, leaving you debt free" referred to the possible benefits of an IVA.  We did not consider that Yourclear's evidence demonstrated a significant proportion of clients had obtained a dividend of 25p in the pound.  We did not consider that Yourclear's evidence covered a period of time long enough to substantiate the claim.  Furthermore, we noted that, while the Insolvency Practitioners used by Yourclear did not charge upfront fees for an IVA, the incorporated fees were added to the dividend paid to creditors and debtors who obtained a dividend of 25p in the pound would pay a larger amount than the 25% payable to creditors.  We understood that, even taking fees into account, a small number of debtors might still be able to write off 75% of their debt but considered that, because we had not seen evidence that demonstrated a significant proportion of consumers could do so, the ad exaggerated the benefits of an IVA.  We concluded that the ad was misleading.

The ad breached CAP (Broadcast) TV Advertising Standards Code rules 5.1 (Misleading advertising), 5.2.1 (Evidence), 5.2.2 (Implications) and 5.2.3 (Qualifications).
Action
We told Yourclear to ensure that future similar claims were based on an amount of debt that a significant proportion of consumers could expect to write off, taking into account the impact of fees.

Adjudication of the ASA Council (Broadcast)

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