Background

Summary of Council decision:

Two issues were investigated all of which were upheld.

Ad description

A TV ad, for Pounds to Pocket, a personal loan company, featured a voice-over which stated, "With a Pounds to Pocket 12 month personal loan you can get up to £2000 sent to your bank account in 10 minutes. Apply online 24/7 at poundstopocket.co.uk/tv and use promo code pocket94 for 20% off your first scheduled payment. No surprises or hidden fees, just fixed payments over 12 months". Accompanying on-screen text stated "NO PAPERWORK. NO GUARANTOR". Small print stated "Representative 278% APR. Additional documentation may be required for identity verification". The ad then featured three individuals who stated, "I could breathe for the first time in a long time as my credit history wasn't great, but Pounds to Pocket was able to help"; "Paying the money back over 12 months made life so much easier" and "I was turned down by the mainstream lenders. I wish I'd gone to Pounds to Pocket first, as their application was fast and simple." The voice-over then stated, "Go to poundstopocket.co.uk/tv and get 20% off your first scheduled payment with promo code pocket94. Pounds to Pocket, the quick and easy way to pocket a 12 month loan today." The voice-over was accompanied by small print which stated "Representative 278% APR ... ".

Issue

1. One complainant challenged whether the APR % rate was made sufficiently clear in the ad, especially in the context of the "20% off your first scheduled payment" incentive that featured more prominently.

2. Two complainants challenged whether the claim "I was turned down by the mainstream lenders. I wish I'd gone to Pounds to Pockets first, because their application was fast and simple" was misleading and socially irresponsible, because it portrayed Pounds to Pocket as preferable to "mainstream lenders" by placing disproportionate emphasis on the loans being "fast and simple" despite their interest rates being significantly higher.

Response

1. Pounds to Pocket believed the annual percentage rate (APR) was prominently included in the legal super, where applicable, and was held on screen for longer than the minimum on-screen hold time required by the BCAP Code. They believed the background scene, which accompanied the APR % rate, was not distracting. They pointed out the APR text was solid in colour and believed it was clear and legible to viewers. They also believed the APR appeared on screen for a significant portion of the ad and therefore provided consumers with sufficient time to read it.

Clearcast believed the APR was fully compliant with the Code in terms of duration on screen, legibility and size. They explained that they had taken into account the amount of background text when calculating the duration of on-screen hold for the APR. They also pointed out that the APR appeared in larger text than other text within the footnote. They therefore believed the APR was made sufficiently clear in the ad.

2. Pounds to Pocket commented that the claim which was the subject of the complaint represented actual customer comments about their service. They argued that the reference to fast and simple related to the application process rather than the loan product itself. They said their products were designed to meet customers' immediate financial needs and believed consumers understood that funds would be transferred quickly. They therefore believed the ad was not misleading or socially irresponsible.

Clearcast believed the ad did not portray the loan product as preferable to a mainstream lenders alternative; rather they believed the ad portrayed the advertised product as an alternative. They acknowledged the ad informed consumers that the process to obtain a loan may be quicker and simpler than a mainstream lender, but believed the ad made clear the APR % rate that applied. They therefore believed the ad was not irresponsible.

Assessment

1. Upheld

The ASA sought comments from the Office of Fair Trading (OFT) on the Regulations.

We noted Regulation 6(1)(b) of Consumer Credit (Advertisements) Regulations 2010 required credit ads to include the representative annual percentage rate (RAPR) when they included an incentive and Regulation 6(2) required that RAPR to be given greater prominence than the incentive.

We understood from the OFT that the claim "you could get up to £2000 sent to your bank account in 10 minutes", was in their view, an incentive within the meaning of Regulation 6(1)(b) and therefore triggered the requirement under Regulation 6(2) that the RAPR be given greater prominence than the incentive. We also understood the OFT considered the RAPR was less prominent in the ad than the incentive, because it did not accompany the claim; rather it appeared later in the ad.

We also understood that the OFT considered the claims "use promo code pocket94 for 20% off your first scheduled payment" and on-screen text which stated "Save 20%" were incentives, in accordance with Regulation 6(1)(b) and therefore the RAPR needed to be given greater prominence than the incentive, in accordance with Regulation 6(2). They noted the RAPR was shown on screen in a smaller font size than the "Save 20%" text. They also noted the RAPR text was white and considered that it was less prominent than the moving multi-coloured background.

We considered the claim "you could get up to £2000 sent to your bank account in 10 minutes" portrayed credit from the advertiser as being available within a short period and therefore portrayed the advertised service as favourable to other creditors. We therefore considered the claims equated to an incentive to apply for a loan offered by the advertiser and required that RAPR to be given greater prominence than the incentive. We noted the claim was not accompanied by text which stated the RAPR; rather the RAPR was displayed later in the ad. We were therefore concerned that the RAPR had not been given greater prominence than the incentive.

We noted the voice-over "use promo code pocket94 for 20% off your first scheduled payment" and on-screen text which stated "Save 20%" offered a discount on repayments. We therefore considered the claims equated to an incentive to apply for a loan offered by the advertiser and required that RAPR to be given greater prominence than the incentive. We noted the voice-over and on-screen text were accompanied by a footnote which stated the RAPR. However, we noted the footnote was in a smaller font size than the text "Save 20%" and was white in colour, which was difficult to read against the white background. We were again concerned that the RAPR had not been given greater prominence than the incentive.

Because the RAPR had not been given greater prominence than the incentive, we concluded that the ad breached the Code.

On this point, the ad breached BCAP Code rules  3.1 3.1 Advertisements must not materially mislead or be likely to do so.  and  3.2 3.2 Advertisements must not mislead consumers by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that consumers need in context to make informed decisions about whether or how to buy a product or service. Whether the omission or presentation of material information is likely to mislead consumers depends on the context, the medium and, if the medium of the advertisement is constrained by time or space, the measures that the advertiser takes to make that information available to consumers by other means.
 (Misleading advertising) and  14.11 14.11 The advertising of unsecured consumer credit or hire services by consumer credit businesses or consumer hire businesses and / or credit brokering  businesses or related credit services, such as debt counselling or debt adjusting is acceptable only if the advertiser complies with the financial promotions requirements imposed by FSMA and the FCA's rules set out in Chapter 3 of CONC..  The requirements for financial promotions set out in Chapter 3 of CONC do not apply: (a) where the credit is available only to a company or other body corporate (such as a limited liability partnership); (b) where a financial promotion is solely promoting credit agreements or consumer hire agreements or P2P lending agreements for the purposes of a customer's business; (c) to a financial promotion to the extent that it relates to qualifying credit or (d) it falls within the definition of an excluded communication as set out in the FCA's handbook. If the applicability or interpretation of these rules or provisions is in doubt, advertisers may contact the FCA. The FCA does not check financial promotions for compliance with the CONC rules before they are published. Such advertisements that involve distance marketing must also comply with the Financial Services (Distance Marketing) Regulations 2004 (as amended). Other distance-marketing financial advertisements are covered by the FCA Handbook.  (Lending and Credit).

2. Upheld

We noted Regulation 6(1)(a)(i) of Consumer Credit (Advertisements) Regulations 2010 required credit ads to include the RAPR when they indicated that credit was available to persons who might otherwise consider their access to credit restricted. We also noted that Regulation 6(2) required that RAPR to be given greater prominence than that indication.

We understood from the OFT that the character's comment that, "I was turned down by the mainstream lenders", in their view, fell within the meaning of Regulation 6(1)(a)(i) and required the RAPR to be given greater prominence than the indication that credit was available to persons who might otherwise consider their access to credit restricted.

We considered the character's comment that "I was turned down by the mainstream lenders. I wish I'd gone to Pounds to Pocket first, as their application was fast and simple" implied that credit was available to persons who might otherwise consider their access to credit restricted. In accordance with Regulation 6(2), we considered the RAPR should have been given greater prominence than that indication. However, we noted the actors' comments were not accompanied by the RAPR and were therefore concerned that the RAPR had not been given greater prominence than the indication.

We also considered the claim “I wish I'd gone to Pounds to Pocket first” carried the implication that Pounds to Pocket could be a first point of call for a prospective borrower, which we considered to be socially irresponsible.

Because the RAPR had not been given greater prominence than the indication that credit was available to persons who might otherwise consider their access to credit restricted, and because the ad could mislead vulnerable consumers who were in financial difficulty, we considered the ad breached the Code and for those reasons we concluded that the ad was misleading and socially irresponsible.

On this point the ad breached BCAP Code rules  1.2 1.2 Advertisements must be prepared with a sense of responsibility to the audience and to society.  (Responsible advertising),  3.1 3.1 Advertisements must not materially mislead or be likely to do so.  and  3.2 3.2 Advertisements must not mislead consumers by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that consumers need in context to make informed decisions about whether or how to buy a product or service. Whether the omission or presentation of material information is likely to mislead consumers depends on the context, the medium and, if the medium of the advertisement is constrained by time or space, the measures that the advertiser takes to make that information available to consumers by other means.
 (Misleading advertising) and  14.11 14.11 The advertising of unsecured consumer credit or hire services by consumer credit businesses or consumer hire businesses and / or credit brokering  businesses or related credit services, such as debt counselling or debt adjusting is acceptable only if the advertiser complies with the financial promotions requirements imposed by FSMA and the FCA's rules set out in Chapter 3 of CONC..  The requirements for financial promotions set out in Chapter 3 of CONC do not apply: (a) where the credit is available only to a company or other body corporate (such as a limited liability partnership); (b) where a financial promotion is solely promoting credit agreements or consumer hire agreements or P2P lending agreements for the purposes of a customer's business; (c) to a financial promotion to the extent that it relates to qualifying credit or (d) it falls within the definition of an excluded communication as set out in the FCA's handbook. If the applicability or interpretation of these rules or provisions is in doubt, advertisers may contact the FCA. The FCA does not check financial promotions for compliance with the CONC rules before they are published. Such advertisements that involve distance marketing must also comply with the Financial Services (Distance Marketing) Regulations 2004 (as amended). Other distance-marketing financial advertisements are covered by the FCA Handbook.  (Lending and Credit).

Action

The ad must not be broadcast again in its current form. We told Pounds to Pocket to ensure their advertising complied with the relevant consumer credit legislation.

BCAP Code

1.2     14.11     3.1     3.2    


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