Background
Summary of Council decision:
Three issues were investigated, of which two were Upheld and one was Not Upheld.
Ad description
Claims on www.corgihomeplan.co.uk/summer6 for utilities cover stated "Below shows equivalent comparisons from Homeserve and British Gas to our Summer 6 policy":
"HomeServe - Gas Central Heating Breakdown + Boiler Service + Electrical Emergency + Plumbing and Drainage + Water Supply Pipe Cover. £41.57 per month. Minimum 1 year contract. Gas supply pipe not covered. Not a guaranteed permanent repair. Radiators & cylinders not covered."
"British Gas - HomeCare 400 with TimeChoice + Water Supply Pipe Cover. £32.00 per month. Minimum 1 year contract. External gas pipe not covered. May use reconditioned parts."
"CORGI HomePlan Summer 6. £19.98 per month. No minimum contract. Price fixed for 2 years. All repairs guaranteed permanent. New original parts always used."
Small print below stated "*Some limitations and exclusions apply. Please refer to our Terms and Conditions for full details". The asterisk did not link to text.
Issue
The complainant challenged whether:
1. the comparisons with HomeServe and British Gas were misleading, because they did not believe the comparisons were on a like-for-like basis and significant differences between the products were not explained;
2. the claim "£41.57 per month" for HomeServe cover was misleading, because they did not believe the price was correct; and
3. the claim "New original parts always used" was misleading and could be substantiated.
Response
1. Green Installer Ltd (GI) said they had tried to draw a fair comparison between the products but none of the products were identical. For the purposes of the comparison, they had identified a number of key differences between the products which were communicated to consumers. GI understood that the complainant had identified two examples of where he believed the comparisons were not like-for-like and did not explain significant differences.
One issue was in relation to the excess on the policy. GI explained that there were no excesses on the CORGI HomePlan Summer policy other than for drainage. They said it was clearly stated in their Summer 6 brochure and on the page of their website entitled "Summary of Cover", as well as in their terms and conditions, that a £50 excess applied to drainage claims. They explained that various excesses, both optional and mandatory, applied to the products from British Gas and HomeServe, but there were too many differences between the products to be able to explain them all on their website.
Another issue raised by the complainant was in relation to the contract term. GI explained that their contract was a rolling monthly plan with no minimum term applied. They understood that new customers to British Gas and HomeServe were committed to an annually renewable contract. CORGI HomePlan customers, on the other hand, paid on a month-to-month basis and could cancel at any time. GI said they reserved the right to charge an administrative fee or to recover some of their costs where a claim had been made against a policy, if the policy-holder cancelled the contract within the first 12 months.
2. GI explained that HomeServe did not offer a single product that was directly comparable to their Summer 6 plan so they had combined a number of HomeServe products to achieve a reasonable comparison, i.e. Gas Central Heating Breakdown Cover with an Annual Service, Electrical Emergency and Breakdown Cover, Plumbing and Drainage Cover and Water Supply Pipe Cover. They then calculated the combined monthly cost. They said that although there were some discounts available for the first year, they had used the ongoing price of the cover rather than the discounted price. They had established the price of this combined cover by a telephone call to the HomeServe sales line on 2 April 2012. They provided an extract of the transcript of the call.
3. GI said they delivered their service via a network of local independent heating companies, plumbers and electricians. These companies underwent a rigorous recruitment process and had signed a contract with GI that set out the standards of service and quality assurance required. One of the terms of the service contract was that they had to supply and fit using only new original replacement parts. They said they required contractors to provide suppliers' invoices for the parts they used and they carried out regular internal audits to ensure compliance.
Assessment
1. Upheld
The ASA noted GI's comment that the products were not identical and that they had tried to highlight the key differences between the products for the purposes of the comparisons. We understood that the CORGI HomePlan had an excess of £50 on drainage cover, although this was not made clear in the comparisons. We noted that the small print referred to the terms and conditions although the small print was not linked to them. We considered that the excess fee was a significant difference between the products which should have been explained in the comparison.
We also noted that the ad did not make clear that the CORGI HomePlan had an administrative fee if a customer cancelled within the first 12 months and that CORGI could recover the costs incurred if a claim had been made, although it did state that HomeServe and British Gas had a one-year minimum contract. We considered that this was also a significant difference between the products which should have been explained in the comparison.
Furthermore, we understood from GI's response to point 2 that the package quoted for HomeServe was not a single product, but had been put together by GI and was made up of several different products, whereas the British Gas and CORGI HomePlan were single products providing combined coverage. We also understood that Homeserve offered combined covers which were more similar to the British Gas and CORGI plans and were more appropriate for the purposes of the comparisons. We therefore considered that the comparison to HomeServe was not made on a like-for-like basis.
For these reasons, we considered that the comparisons were misleading, because they were not on a like-for-like basis and significant differences were not explained.
On this point, the claims breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
(Misleading advertising),
3.33
3.33
Marketing communications that include a comparison with an identifiable competitor must not mislead, or be likely to mislead, the consumer about either the advertised product or the competing product.
and
3.35
3.35
They must objectively compare one or more material, relevant, verifiable and representative feature of those products, which may include price.
(Comparisons with Identifiable competitors) and
3.39
3.39
Marketing communications that include a price comparison must make the basis of the comparison clear.
CAP has published a Help Note on Retailers' Price Comparisons and a Help Note on Lowest Price Claims and Price Promises.
(Price comparisons).
2. Upheld
We understood that GI had established the price of £41.57 by adding together the monthly combined cost of several different covers offered by HomeServe and that there was no standalone product which had a monthly price of £41.57. We also understood that GI had not incorporated the discounts for the first year into the price quoted. As noted in point 1, we understood that Homeserve offered combined cover at a cheaper price than £41.57 per month which would have been a more appropriate comparison since that was more similar to the CORGI Homeplan. For these reasons, we concluded that the price used for HomeServe was not the correct one to use in making the comparison and was therefore misleading.
On this point, the claim breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
(Misleading advertising),
3.33
3.33
Marketing communications that include a comparison with an identifiable competitor must not mislead, or be likely to mislead, the consumer about either the advertised product or the competing product.
and
3.35
3.35
They must objectively compare one or more material, relevant, verifiable and representative feature of those products, which may include price.
(Comparisons with Identifiable competitors) and
3.39
3.39
Marketing communications that include a price comparison must make the basis of the comparison clear.
CAP has published a Help Note on Retailers' Price Comparisons and a Help Note on Lowest Price Claims and Price Promises.
(Price comparisons).
3. Not Upheld
We understood that GI delivered their service via a network of local independent heating companies, plumbers and electricians and that these contractors had signed a contract with GI which set out the standards of service and quality assurance required. One of the terms of the service contract was that the contractors had to supply and fit using only new original replacement parts. GI enforced this requirement by making sure contractors provided their suppliers' invoices for the parts they had used and by carrying out regular internal audits. Because these safeguards were in place, we considered that the claim "New original parts always used" had been substantiated and was not misleading.
On this point, we investigated the claim under CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising) and 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation) but did not find it in breach.
Action
The claims must not appear again in their current form. We told Green Installer to ensure that future comparisons are made on a like-for-like basis and have significant differences explained.
