Background
Summary of Council decision:
Four issues were investigated, all of which were Upheld.
Ad description
Two TV ads, for BrightHouse, a rent-to-own retailer. Both showed various products, such as TVs, kitchen appliances, furniture and games consoles. They included a voice-over that stated “… whatever your family needs, BrightHouse can help. Simply apply online at Brighthouse.co.uk or pop to your local store. BrightHouse, your weekly payment store”. On-screen text read “Representative APR 69.9% (fixed). BrightHouse is committed to responsible lending. TV energy ratings, A, A, A+, Washing machine A+++, Fridge Freezer A+, Cooker B. Caversham Finance Ltd WD25 7GS. Purchase restrictions outside store catchment areas. Subject to status. T&Cs apply”.
a. The first ad was seen on 30 September and 1 October 2015.
b. The second ad was seen on 21 October. On-screen text that appeared with each of the products stated “TVs from £7.50 per week”, “Furniture from £8.50 per week”, “Kitchen Appliances from £6.00 per week” and “Games Consoles from £6.50 per week”. Further on-screen text read “TV Representative Example: Cash price £588.75, 156 weekly payments of £7.50, total payable £1,170. Representative APR 69.9% (fixed). Annual interest rate 69.9% (fixed)”.
Issue
1. Two viewers, who believed the on-screen text was not legible, challenged whether ad (a) was misleading.
The ASA challenged whether:
2. ad (a) breached the Code because it did not include a representative example
3. both ads were misleading, because they did not make clear that consumers were required to have or purchase insurance to cover fire, theft and accidental damage to be able to obtain products from BrightHouse; and
4. both ads were misleading, because they did not make clear that the weekly payments were inclusive of the cost of a non-optional service package.
Response
Caversham Finance Ltd t/a BrightHouse said their customers were often credit-impaired, on low incomes and on the edges of financial exclusion. That hindered many of them from obtaining products they needed, such as washing machines and fridge freezers, which many people were able to take for granted. They rented products to consumers, who made weekly payments, usually for 156 weeks, and after that owned the products outright. If a customer found themselves in financial difficulty during the rental period, BrightHouse could help, for example, by offering a lower priced product or a break from the agreement. While they believed the ads did not breach the Code, they were prepared to make changes in line with the ASA’s recommendations.
1. BrightHouse said they worked with Clearcast to ensure their advertising complied with the relevant guidelines, including in relation to the size of on-screen text and duration for which it appeared. They said they would take into account that one of the complainants believed that the text was too narrow in future.
Clearcast said they were satisfied the ad met requirements for legibility of on-screen text. In addition to the height of the text and duration of hold being acceptable, the advertiser had used black text against a white background, which stood out more than some lighter shades of text would. The animations in the ad did not overlap with the on-screen text, aside from briefly at the end. They considered the on-screen text was sufficiently legible.
2. BrightHouse said Financial Conduct Authority (FCA) rules generally required a representative example to be included in ads that stated an interest rate or an amount related to the cost of credit. However, there was a specific exception (at 3.5.3 of the Consumer Credit Sourcebook (CONC)), if the only rate or amount shown was the representative APR (RAPR) and if the ad stated or implied that credit was available to individuals who might otherwise consider their access to credit as restricted. BrightHouse said both of those conditions were met in ad (a). In relation to the second condition, they worked to ensure their ads were shown on the appropriate channels, and with the relevant programming, to ensure they reached their target audience. Therefore, anyone who saw the ad would be aware of what BrightHouse offered. They believed the RAPR was important for their customers and had therefore chosen to include it. However, if an ad did not include a trigger that prompted the inclusion of an RAPR in future, the RAPR would not be stated.
Clearcast endorsed BrightHouse’s response. They said they were aware that there were particular complexities around advertising consumer credit and hire purchase items and, as such, sought assurance from advertisers that they had carefully considered the relevant regulations and asked for an explanation of how they considered an ad complied. Unlike many other BrightHouse ads, ad (a) did not include any price information and they had accepted BrightHouse’s reasoning that a representative example was not required, only an RAPR.
3. BrightHouse said consumers were required to have insurance to cover the product for fire, theft or accidental damage but if they could provide evidence that they had equivalent home contents insurance, they did not have to purchase it from BrightHouse. However, BrightHouse’s option provided the relevant cover with no excess to pay and a simple claims process. Some consumers therefore preferred to take that option in addition to existing home insurance. According to their customer satisfaction research for August, September and October 2015, 85% of those surveyed had chosen to take BrightHouse’s insurance. Of those customers, 33.5% (28.4% of the total surveyed) already had their own insurance but had chosen to also take BrightHouse’s cover. BrightHouse’s insurance could be cancelled at any time if consumers subsequently decided to take insurance elsewhere. Premiums were also fully refunded for cancellations in the first 14 days where no claim had been made.
They believed they did not need to include information in their ads about the requirement for consumers to have insurance because they made it available by other means, such as on their website, in catalogues and various places in-store. All relevant information was included on the website’s home page and also throughout the application process. In addition, the TV ads stated “T&Cs apply” and consumers were directed to visit the website or a store. BrightHouse said it would not be possible for a consumer to receive a product without the need for insurance having been highlighted before they signed the hire purchase agreement. While they believed consumers were provided with all of the information they needed before making a purchasing decision, they would include further details about the insurance requirement in future advertising.
Clearcast again endorsed the advertiser’s response. They considered the reference to “T&Cs” in on-screen text adequately covered the requirement to take insurance and that it was not necessary to have provided any further detail. Clearcast said many consumers would already have suitable insurance and those who did not would have the option of taking it from BrightHouse or via a separate provider. They believed any reference to the insurance in the ads could be confusing, given that variety of possible situations (that consumers already had their own home insurance, or another form of suitable insurance, or they needed insurance and took it from BrightHouse) and, as such, it was preferable to state “T&Cs apply”. On studying the terms and conditions for the hire purchase agreement, consumers would see information about the insurance, among other details. Clearcast pointed out that over 40% of the customers BrightHouse had surveyed had insurance of their own but that some had opted to also take insurance from BrightHouse. They considered the ads did not omit material information and were therefore not misleading.
4. BrightHouse said consumers’ weekly payments incorporated an after sales-service package that included comprehensive cover against breakdowns. Their agreements allowed consumers to return the products at any time, for any reason and in any condition with nothing further to pay. They would be unable to offer that option without the service package, which included delivery, installation, unlimited repairs, as well as a loan product where appropriate, and like-for-like product replacement. The cost breakdown for each element of the service package was shown, in-store, in catalogues and online, for transparency and to allow comparisons with other retailers. Because there was no choice regarding whether or not to take the service package, or which elements were included, consumers either bought the BrightHouse product and service package as a whole or could seek a similar arrangement elsewhere. Again, they believed consumers had adequate information before making a purchasing decision but were prepared to include additional details in future ads.
Clearcast said the service package was not additional to the cost of the product and the prices shown in ad (b) reflected the overall weekly cost, for both the product and service elements. They said those aspects of the service had been made clear to them when the ad was cleared and they considered the prices did not need to be broken down further in relation to the service package, in particular because consumers had to pay the stated prices and could not choose to take only some elements of the package. They believed consumers would not feel misled to discover the quoted prices included services such as installation and repairs. Because the service package was non-optional, they considered it was not misleading for the ads to omit that it was included in the quoted prices. Clearcast also consider that the impression could be given that the service package was optional if further explanation, or a price breakdown, was provided. They said the service package was an integral feature of what BrightHouse offered, because consumers did not own the products until they were paid off and so responsibility for repairs, for example, remained with the advertiser throughout the contract.
Assessment
1. Upheld
The ASA acknowledged BrightHouse were willing to make changes to their advertising and noted the on-screen text complied with guidelines for duration of hold. We considered its size did not appear problematic and also acknowledged the text had a plain style, and that black text on a white background did not in itself make it difficult to read. However, the Code required advertisers to present qualifications clearly, with the aim being to achieve a standard of legibility that would enable an interested viewer, who made some positive effort, to read all text. In addition, CONC 3.3.2 (2), with which the Code stated that credit ads must comply, required that ads were easily legible.
We noted the complainants said they were unable to read the text, and one had described it as being too narrow. We considered the letters were narrow, and that the text appeared condensed, and that consumers viewing the ad on TV were therefore unlikely to be able to read it. In the circumstances of this particular ad, we considered the superimposed text included information that could affect a consumer’s decision on whether to seek to obtain products from BrightHouse, for example the RAPR (which we understood they had included voluntarily) and the reference to purchase restrictions. Because the superimposed text was not presented clearly, and contained information that we considered to be material to a consumer’s transactional decision, we concluded that the ad was misleading.
On that point, ad (a) 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),
3.11
3.11
Qualifications must be presented clearly.
BCAP has published Guidance on Superimposed Text to help television broadcasters ensure compliance with rule
3.1
3.1
Advertisements must not materially mislead or be likely to do so.
. The guidance is available at:
http://www.cap.org.uk/~/media/Files/CAP/Help%20notes%20new/BCAP_Advertising_Guidance_Notes_1.ashx
(Qualification) 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.
(Financial products, services and investments).
2. Upheld
We considered ad (a) did not imply that credit was available to individuals who might otherwise consider their access to credit restricted. While the ad referred to BrightHouse being a “weekly payment” retailer, we understood that to be the norm for rent-to-buy companies and that, as such, that did not in itself constitute an incentive to apply for credit which triggered the inclusion of the RAPR. We understood there was also nothing else in the ad that necessitated the inclusion of the RAPR. However, according to CONC 3.5.3 (1)(a), the inclusion of an RAPR as a rate of interest or other amount relating to the cost of the credit meant the ad was required to include a representative example. We considered it was clear from the wording of CONC 3.5.3 (2)(b) (“ ... a rate of interest or other amount relating to the cost of the credit other than the representative APR”) that the RAPR, if included in an ad voluntarily, fell within the scope of the provision and constituted a trigger requiring the inclusion of the full representative example. Because the ad did not include a representative example, we concluded that it did not comply with the relevant requirements
On that point, ad (a) 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).
3. Upheld
We understood that consumers who wished to obtain a product from BrightHouse were required to have suitable insurance, which they might already have or could take from BrightHouse, or from a separate provider. While we acknowledged that ad (a) did not include any price claims, whereas ad (b) did, we considered the requirement to have or take suitable insurance was in any case material information likely to affect a consumer’s decision on whether or not to make further enquiries about pursuing an application with BrightHouse. We noted that information was not included in the ads and, as such, viewers could not be expected to be aware before, for example, visiting BrightHouse’s website, or a store, of the need either to check the suitability of their existing insurance policy or, importantly, that the purchase would involve costs additional to those associated with the products if they did not already have suitable insurance (as had been the case for 56.2% of BrightHouse customers surveyed). Because the ads did not make clear the requirement for consumers to have or take suitable insurance, which was material information, we concluded that they were misleading.
On that point, ads (a) and (b) 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
3.18
3.18
Price statements must not mislead by omission, undue emphasis or distortion. They must relate to the product or service depicted in the advertisement.
(Prices).
4. Upheld
We considered the ads were likely to be understood by viewers to mean BrightHouse offered products on a weekly payment basis and that those payments related to the products alone. In the case of ad (b), we welcomed that the weekly prices shown were inclusive of the service package, as was required for price statements that included non-optional charges, and acknowledged that the service package did not attract costs additional to those stated. However, in the absence of explanation to the contrary, we considered viewers would not expect the weekly payments referred to in both ads to incorporate a cost for service cover, as well as the cost of the products themselves. We considered the requirement to take the service package was also material information consumers could not be expected to be aware of and was likely to affect a consumer’s decision on whether or not to make further enquiries about pursuing an application with BrightHouse. As such, they should be aware of that before making any enquiries. Although the specific prices shown in ad (b) were inclusive of the charge, because neither ad stated that the weekly costs involved in taking an agreement with BrightHouse were inclusive of the non-optional service charge, which was material information, we nevertheless concluded that they were misleading.
On that point, ads (a) and (b) 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
3.18
3.18
Price statements must not mislead by omission, undue emphasis or distortion. They must relate to the product or service depicted in the advertisement.
(Prices).
Action
The ads must not be broadcast again in their current form. We told BrightHouse to ensure qualifications were presented clearly in future and that material information was made clear. We also told them to ensure their future advertising met the financial promotions requirements.
