Background
Summary of Council decision:
Two issues were investigated, of which one was Upheld and one Not upheld.
Ad description
A TV ad for Oak Furniture Land seen on 15 November 2017 featured a voice-over that stated, “At Oak Furniture Land you can pay nothing today. With no deposit, have all of this 100% solid natural oak living room furniture and sofa from £43 per month and there’s nothing to pay on all of this solid hardware bedroom furniture from £44 per month with four years to pay …”.
During the ad two red roundels appeared. The first one featured text that stated “ALL THIS LIVING ROOM FUNITURE FROM £43 PER MONTH 9.9% APR”. The second roundel featured the text “ALL THIS BEDROOM FROM £44 PER MONTH 9.9% APR”. With the exception of the final shot of the ad, there was on-screen text at the bottom of each frame that stated “9.9% APR representative example bedroom - Total payable £2,092.80. Cash price £1,736.22. Deposit Nil. Amount of credit £2,092.80. 48 monthly payments of £43.60. Interest rate 9.9% fixed. Total charge for credit £356.58. Subject to status. Min spend £500 …”.
Issue
The complainant, an advertising agency, challenged whether the ad breached the Code because:
1. the representative APR (Annual Percentage Rate) was not given adequate prominence; and
2. the term “representative” was not included in the roundels.
Response
1. JB Global Ltd t/a Oak Furniture Land stated that they only provided two types of credit to consumers. The first type, which was featured in the ad, was charged at a fixed interest rate of 9.9%. The second type was interest free (0%) credit and was available on orders with a value of £3,500 or more.
Oak Furniture Land stated that the individual costs for the living room and bedroom suites shown in the ad were priced below £3,500 (being £1,736.22 in each case) and therefore, the only credit terms that they offered for the items was at a fixed interest rate of 9.9% APR. Oak Furniture Land referred to rule 3.2.3 of the Consumer Credit Sourcebook (CONC), which stated “For the purposes of this chapter, information or a statement included in a financial promotion or communication will not be treated as prominent unless it is presented, in relation to the other content of the financial promotion or communication, in such a way that it is likely that the attention of the average customer to whom the financial promotion or communication is directed would be drawn to it.”
Oak Furniture Land stated that viewers were highly likely to have had their attention drawn to the APR quoted in the ad by the combination of the small print and the roundel, both of which were on-screen for almost the entire duration of the ad.
Oak Furniture Land believed that it was clear from that definition that CONC took a principle based approach. There was no particular reference to font size, and they simply used the font size required by Clearcast. They further stated that CONC did not specify a particular duration of time for such information to appear on-screen and that they had been advised by Clearcast accordingly.
Oak Furniture Land believed that the representative APR was given “adequate prominence” as defined in CONC, through its display in both the small print and in the roundel, both of which appeared on screen throughout almost the entire duration of the ad.
Oak Furniture Land stated that the on-screen text shown at the bottom of the ad appeared for 17 seconds out of the 20 seconds that it ran, which they believed provided all the information required by CONC in relation to a “Representative Example”.
Oak Furniture Land stated that the roundels were also on screen for 17 seconds out of the 20 seconds that it ran, and clearly and prominently stated the relevant monthly payment and “9.9% APR”. They believed that the text in the roundels was in the same font size as the small print. Furthermore, the small print shown at the bottom of the ad was clearly legible and the roundels themselves gave the APR further prominence.
Oak Furniture Land believed that rule 3.5.7 of CONC did not apply to this case, because the ad was: not directed at consumers with impaired credit; did not make a favourable comparison relating to credit; and did not promote an incentive to apply for credit.
Oak Furniture Land therefore believed that the rules regarding prominence only applied in relation to the entire representative example (covered by CONC rule 3.5.5(5)), and not to the standalone reference to the fixed rate of 9.9% APR in this case (covered under CONC rule 3.5.7(2)). They stated that the test/threshold was that the entire representative example must be presented “in such a way that it is likely that the attention of the average customer to whom the financial promotion or communication is directed would be drawn to it”. They believed that this threshold had been met in the ad.
Oak Furniture Land referred to CONC rule 3.5.8(4) which stated “A statement about matters such as the speed or ease of processing, considering or granting an application, of entering into an agreement, or of making funds available, may constitute an incentive for the purposes of CONC 3.5.7R(1)(c). This will depend on the context of the statement and the circumstances in which it is made. A statement will be an incentive where it is likely to persuade or influence a customer to apply for credit or to enter into an agreement under which credit is provided, or is presented in a way which is likely to have that effect”. Oak Furniture Land believed that although the third sentence of the rule was very general, it had to be read in the context of the paragraph as a whole, including the references to: (a) speed or ease of processing; (b) considering or granting an application or of entering into an agreement; or (c) making of funds available. Otherwise, they believed it was difficult to see how any ad which offered credit would fall outside the definition of “incentive”.
Oak Furniture Land stated that the voice-over in the ad referred to their usual (and only) terms on which they offered credit, being no deposit over four years. They believed it was a simple factual statement of the credit terms, and did not imply “easy terms” or “rapid response to your application” or any other incentive.
Oak Furniture Land also referred to CONC rule 3.5.8(5) which stated “Other examples of things which could be incentives are gifts, special offers, discounts and rewards”. They believed that this also made it clear that there was nothing in the voice-over which constituted a gift, special offer, discount or reward.
Oak Furniture Land stated that neither CONC nor any official guidance made reference to voice-overs, or making a distinction between the relative prominence of information that was included in a voice-over verses on-screen text or other images.
Oak Furniture Land referred to some guidance published by an official authority’s predecessor, which defined prominence as “the state of being easily seen, i.e. in terms of a statement within a financial promotion, likely to attract attention, for instance, by virtue of its size or position”. Oak Furniture Land stated that the guidance acknowledged that prominence could be subjective and should be looked at “in the context of the promotion as a whole. [The advertiser] should consider the positioning of text, background, colour and type size to ensure that the prescribed information meets our requirements”.
Oak Furniture Land stated that the roundel featured the reference to the APR but without the word “representative”. However, as it was the only APR at which they offered credit, and given the word was juxtaposed with the APR which appeared in a large font for the duration of the ad at the bottom of the screen, they believed that they had complied with the requirement. Furthermore, Oak Furniture Land stated that consumers and viewers were well aware that important information about financial promotions was usually provided in text at the bottom of the screen. Their representative example was provided in the customary position and using a size and font size that complied with Clearcast rules, for the entire duration of the ad.
Oak Furniture Land referred to rule 3.5.5(5) of CONC which stated, “The information required by (1) must be: (a) specified in a clear, concise and prominent way; (b) accompanied by the words “representative example”; (c) presented together with each item of information being given equal prominence; and (d) given no less prominence than: (i) any other information relating to the cost of credit in the financial promotion, except for any statement relating to an obligation to enter into a contract for an ancillary service referred to in CONC 3.5.10 R …”.
Oak Furniture Land stated that the representative example was provided clearly, concisely and prominently in the small print, which Clearcast had approved. Furthermore, it was identified as such in the small print and appeared in the same font and size as the rest of the text that appeared in the small print.
Regarding the requirement that the representative example must be given no less prominence than any other information relating to the cost of credit in the financial promotion, Oak Furniture Land believed that the APR in the roundel was the same information as that contained in the representative example shown in the small print, rather than being “other” information. Furthermore, they believed that the information in the small print had no less prominence than the information in the roundel, because it had the same font size and appeared on screen for most of the ad.
Oak Furniture Land stated that if the APR in the roundels was to be regarded as “other information”, the text in the small print was still given no less prominence in comparison. Furthermore, they stated that if the information in the voice-over was interpreted as “other information”, the representative example set out in the small print had “equal prominence”, at the very least, because of the font size, hold and visual prominence and that it remained on-screen throughout the ad, except in the final shot.
Clearcast stated that as a matter of course, when an ad featured an offer of credit, they asked that a qualified individual from the advertiser's business provide them with a written assurance that the ad was compliant with consumer credit advertising regulations, which they had received. They provided the ASA with a copy.
2. Oak Furniture Land stated that there was no requirement in CONC that every reference to an APR be labelled as representative or otherwise. They believed that the ad complied with the requirement of CONC rule 3.5.5(1) (d) by labelling the APR as “representative” where it appeared in the representative example. Furthermore, because it was the only interest rate available, they believed it clearly met the definition of a representative example of CONC rule 3.5.6(1)(A).
Oak Furniture Land referred to the requirements of rule 3.5.9 of CONC, which stated “In a financial promotion: (1) an APR must be shown as “%APR”; (2) where an APR is subject to change it must be accompanied by the word “variable”; and (3) the representative APR must be accompanied by the word “representative”.
They believed that the ad satisfied the first limb of this rule in both the small print and the roundels. The second limb was not applicable, because the APR was not subject to change and was therefore not variable. Furthermore, the ad satisfied the third limb because the representative APR, as set out in the representative example, was accompanied by the word “representative”, which appeared at the bottom of the screen for the duration of the ad, except in the final frame.
Oak Furniture Land believed that it was clear from rule 3.5.9 that while the representative APR must be accompanied by the word “representative”, not every reference to the APR had to be accompanied by that word.
Clearcast stated that as a matter of course, when an ad featured an offer of credit, they asked that a qualified individual from the advertiser’s business provide them with a written assurance that the ad was compliant with consumer credit advertising regulations, which they had received. They provided the ASA with a copy.
Assessment
1 Upheld
The ASA noted that CONC rule 3.5.7 (1) stated that an ad must include a representative APR (RAPR) if it included, amongst other elements, an incentive to apply for credit. We understood that CONC rules 3.5.8(4) and 3.5.8(5) provided guidance and examples on what “incentive” meant, but were not however to be regarded as providing absolute definitions of the term. They were therefore to be applied in a broad manner on a case-by-case basis.
We considered that the voice-over’s reference to “At Oak Furniture Land you can pay nothing today. With no deposit, have all of this 100% solid natural oak living room furniture and sofa from £43 per month and there's nothing to pay on all of this solid hardware bedroom furniture from £44 per month with four years to pay” was an incentive, and contrary to what Oak Furniture Land had stated, triggered the requirement to include an RAPR under CONC rule 3.5.7 (1)(c), which stated “(1) A financial promotion must include the representative APR if it: … (c) includes an incentive to apply for credit or to enter into an agreement under which credit is provided. We noted that the ad featured an interest rate of 9.9% and consequently, requirements to include an RAPR as well as a representative example were triggered.
We noted that CONC rule 3.5.7 (2) in relation to the RAPR and 3.5.5 (5) (d) in relation to the representative example, stated that the RAPR and the representative example must be given no less prominence than the information which triggered their inclusion. We noted that the RAPR was shown in two large red roundels that appeared at the top of the ad in a bold white font, which we considered was clearly legible and stood out. The two roundels quoted different monthly payments for two different products (bedroom and living room furniture) and appeared at different times in the ad, but quoted the same APR of 9.9%. Therefore, given that the 9.9% APR shown in the roundels appeared in every shot of the ad except in the final frame, we considered it had also been featured in the ad for a sufficient period of time for viewers to read.
The RAPR was also presented at the bottom of the ad along with the representative example as on-screen text in a white font and along with the size of that text, we considered was clearly legible. Furthermore, we noted that the text was shown in every shot of the ad except in the final frame, and had therefore been featured in the ad for a sufficient period of time for viewers to read. However, CONC rule 3.5.5 (5) (d) stated that the representative example must not be given less prominence than any other information relating to the cost of credit in a financial promotion. Given that the monthly repayment amounts and the APR for the products appeared in large red roundels at the top of the screen, we considered the representative example was given less prominence in comparison, as it appeared in white text at the bottom of the screen.
The ad featured a voice-over from start to end and quoted the monthly cost for the featured bedroom and living room furniture, emphasising how viewers would not need to pay any deposit for the furniture shown in the ad and that monthly payments could be made over a four-year period. However, we noted that the voice-over did not refer to the RAPR and representative example. Furthermore, it was fast-paced and loud, and along with the emphasis on the incentives of purchasing the advertised furniture, we considered was likely to instantly grab viewers‟ attention from the outset.
We considered that given the roundels quoting the RAPR clearly stood out at the top of the screen and appeared from the beginning of the ad and was shown in every shot except in the final frame, it was unlikely to be seen as less prominent than the information communicated in the voice-over.
However, we noted that the representative example was shown as on-screen text located at the bottom of the ad. Therefore, given that the voice-over did not refer to the RAPR and representative example and was fast-paced and loud, and along with the emphasis made on the incentives of purchasing the furniture, the use of on-screen text to present the RAPR and representative example located at the bottom of the screen was unlikely to meet CONC's requirements, that it be given no less prominence than the information which triggered their inclusion.
For that reason, we concluded that the ad breached the Code.
On this point, the ad breached BCAP Code rule 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. (Financial products, services and investments).
2. Not upheld
We noted that the representative example shown in the text at the bottom of the screen included the representative RAPR as required by CONC rule 3.5.5(1)(d) and that rule 3.5.9(3) of CONC stated, “In a financial promotion: … the representative APR must be accompanied by the word ‘representative’ …”.
The roundels quoted different monthly repayments and the applicable APR (9.9%) for two different products (bedroom and living room furniture). We considered that they were therefore referring to individual product examples, each with its’ own repayment amount and APR, and whilst the latter corresponded to the representative APR shown at the bottom of the screen, we did not consider it claimed to be the actual representative APR.
Because of that, we considered that the APR quoted in the roundels did not need to include the term “representative” and we concluded that the ad met the requirements of CONC and did not breach the Code.
We investigated this point under BCAP Code rule 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. (Financial products, services and investments), but did not find it in breach.
Action
The ad must not appear again in its current form. We told Oak Furniture Land to ensure its advertising complied with the requirements of CONC.
