Financial Advertising

Financial advertising in the UK is regulated by both statute and the advertising codes. Non-broadcast ads for financial services and products including those for investment opportunities, mortgages, general insurance, savings and bank accounts are regulated by the Financial Services Authority (FSA). Complaints about misleading claims in these types of ads should be directed to the FSA.

Additionally, the Consumer Credit Act is applicable to ads for credit. This is enforced on a local level by individual Trading Standards departments.

However, the legislation does not cover all aspects of financial advertising and beyond the legally required wealth warnings, does not apply to broadcast ads. Therefore all the advertising codes contain specific rules on the advertising of products and services in this area. In particular, the legislation does not cover matters of taste and decency.
 
THE ADVERTISING CODES
Legislation does not specifically cover potential problems with matters of taste and decency, privacy and incitements to anti-social behaviour.  The ASA can deal with all financial advertisements that raise complaints about these and other aspects of the Codes which require respect for the principles of fair competition and a sense of responsibility from advertisements.

In addition to the general requirements, there are also specific rules within the Codes which apply to financial services advertisers. These include: 

*  Advertisements should be easily understood by their audience and should not take advantage of people's inexperience.  

* The nature of the contract being offered including any limitations, expenses, penalties, charges and the terms of withdrawal should be made clear. 

* The basis used to calculate rates of interest, forecasts or projections should be clear. 

* Advertisements should make clear that the value of investments is variable and can go down as well as up, and that references to past performance do not necessarily prove future success.

ASA IN ACTION

Barclays Bank plc (July 2006)
This TV ad claimed "10% on our regular saver account". Superimposed text onscreen stated "Fixed interest paid at end of 12 month term. 12 monthly credits of £25 to £250 to Saver and £1000+ to Barclays current account (including salary) required. No withdrawals. Conditions apply. Limited offer." Four complaints were received that the ad was misleading because it did not make clear that the 10% fixed interest payment was limited to one year and that customers had to switch their current account to Barclays. The advertisers believed this information was all presented in the superimposed text. However, we were concerned that the only indication of these conditions was in the superimposed text. Furthermore, we considered that the statement "Fixed interest paid at end of 12 month term" might be interpreted to mean that the 10% interest was paid to the account once a year rather than for one year only. We considered that the ad should have stated more prominently that the advertised rate of interest was limited to one year and that customers were required to hold or open a current account with Barclays. The complaints against the ad were upheld.

Mortgage Sense (Dec 2005)
A regional press ad was headlined "4 GOOD REASONS TO REMORTGAGE". Small print to the ad stated "Written quotations available on request. All secured on property. 2.69% fixed for 2 years ... After the 1st 24 months you will be offered a further fixed rate or variable rate of 5.74% APR, these rates will reflect interest rates at the time." The complainant, who had contacted the advertisers and was offered a rate of 8.15%, objected that the ad misleadingly implied that all respondents would be offered a mortgage at 2.69%. The advertisers acknowledged that the advertised rate was not always available to those customers who had no proof of income, County Court Judgements (CCJs), poor credit history, poor credit history or had had problems with mortgage repayments. We considered that the use of the claim "2.69%" unqualified implied that all respondents would be offered a mortgage at that rate. Furthermore, because the ad included the statement "No Equity? No Problem? Poor credit history  Low credit score ... CCJ's/defaults  Ex-bankrupt/arrears ... Self employed (with or without accounts)", we considered that the ad implied the advertised rate of 2.69% would be available to those with a poor credit history, CCJs or were bankrupt. We concluded that the ad was misleading and the advertisers were told to make clear in future ads that the introductory rate was subject to the individual circumstances of the respondent.

MBNA Europe Bank Ltd (June 2005)
A brochure for a credit card, inserted into national press publications, was headlined "0% p.a on balance transfers for 9 months". On the last page a "summary box" table stated "Other Charges: 2% handling fee (min. £2, max. £35) on: credit card cheques and some balance transfers". Two complaints were received that the advertisers charged a mandatory handling fee for balance transfers, so they challenged the accuracy of the headline claim. MBNA said the complainants had been wrongly informed by call centre staff that a handling fee was mandatory on balance transfers. They explained that approximately half of all balance transfers incurred a fee; whether one was charged depended on many factors. We considered that a handling fee was charged to a significant proportion of respondents to the offer. We noted the brochure stated "You may be charged a fee for transferring a balance. See terms and conditions for full details" but that the terms and conditions didn't specify the circumstances under which a fee would be charged. We considered that the advertisers should have stated that a 2% handling fee may be payable more prominently in the ad, without we concluded that the headline claim could mislead customers.

Halifax plc (April 2004)
Egg Banking plc complained about a national press ad for the advertisers' Halifax One card that was headlined "Egg beating". The ad claimed "... a fantastic 0% on balance transfers and new purchased for 9 months, a typical APR of just 9.9%, no annual fee and 0.5% cashback on purchases. Now, beat that". The ad contained a table that claimed that the Halifax One card offered an APR rate of 9.9%; an asterisk linked that rate to a footnote below the table that stated "Your APR will be between 9.9% and 18.9% dependent upon your personal circumstances." The table also claimed that the Halifax One card offered 0% on new purchases and balance transfers for nine months and that Egg offered an APR of 13.9% and 0% on new purchases and balance transfers for 6 months. Egg had several points of complaint, however, of the five points that they raised only one was upheld. We upheld their objection that the headline claim was misleading; Egg had pointed out that they offered a lower rate for cash advertisers. Halifax had argued that consumers would understand that the claim related to their introductory offer on balance transfers and purchases. They argued that relatively few consumers used their cards for cash advances. We considered that the claim implied that the advertisers offered better rates on all the services that were available to card holders. Because they did not, we considered that the headline claim was misleading.