Background
Summary of Council decision:
Two issues were investigated, both of which were Upheld.
Ad description
A TV ad for PerfectHome, a rent-to-own retailer, broadcast on 24 May 2016, featured various products such as sofas, kitchen appliances, TVs, games consoles and dining room furniture. On-screen text stated "Representative 69.8% APR fixed. Temple Finance Ltd B46 1DL. Subject to status. Products are required to be insured. T&Cs apply. [website address]". Claims in the voice-over stated, "At [website address], you can get a huge range of products with low weekly payments from family sized sofas to cosy recliners, so you don't have to splash out to get comfy. Style up the kitchen with big brand appliances ... and no deposit. Or have a kick about with the lads. Back of the net! And the icing on the cake? Free delivery. Get your hands on loads of big name brands. With flexible ways to pay, available on line at [website address]. Pay for the biggest brands, bit by bit." Two large roundels appeared during the ad at different times and stated "LOW WEEKLY PAYMENTS" and "NO DEPOSIT" respectively.
Issue
1. A viewer challenged whether the ad breached the Code because the representative APR (Annual Percentage Rate) was not given adequate prominence as required.
2. The ASA challenged whether the ad, particularly the claim "style up the kitchen with big brand appliances", promoted the purchase of items on high-interest credit in an irresponsible manner.
Response
1. Temple Retail Ltd t/a PerfectHome said they understood that the Financial Conduct Authority’s (FCA) Consumer Credit Sourcebook (CONC) stated that ads required to include a representative APR (RAPR) must give it no less prominence than the information which triggered its inclusion in the ad. Although they understood there was no guidance or particular rule which defined or suggested the likely interpretation of “no less prominence”, they had interpreted it to mean that the RAPR should, at least, be of equal prominence to the “trigger” information.
PerfectHome said the font of the RAPR was 40% bigger than the text “low weekly payments” and “no deposit” which appeared in the roundels. Additionally, they said it was 15% bigger than the other information which appeared alongside in the on-screen text.
PerfectHome said the RAPR was legible, static, unobscured, and easily distinguishable from other text appearing in the ad. They believed it appeared in a prominent place – near the centre of the screen – which was in contrast to the two roundels that appeared in the top right-hand corner. Furthermore, they noted the RAPR appeared on screen for 27 seconds, whereas the roundels appeared for five and three seconds respectively.
Clearcast supported PerfectHome’s comments. They believed the RAPR was more prominent in size than the rest of the on-screen text and noted that it was held throughout the duration of the ad. They said the on-screen text at the bottom of the ad complied with the relevant BCAP advertising guidance, specifically in relation to text size and duration of hold. For those reasons, they were happy to clear the ad for broadcast.
2. PerfectHome said they were a retailer of household goods and that their lending function was incidental to that. They explained that its purpose as a lender was to enable their customers to spread out the cost of purchases in a way that suited them. They reiterated that they were not a provider of high cost credit that encouraged the taking of loans rather, they advertised goods for sale and a corollary of that was that the sales took place on credit.
PerfectHome said the ad was intended to show a representative range of the products available from them and there was no suggestion that customers should have all the featured products at once, or that credit should be used to improve their home. They explained that the reference to “styling up” was intended to refer to the fact that, as a retailer, they held the latest and most fashionable items in stock, which ranged from low ticket items such as microwaves to larger ones such as fridge freezers, which were often available in a selection of modern styles and colours. They added further that the reference to “big brand appliances” was intended to provide customers with reassurance over the reliability and quality of the PerfectHome’s products. As such, they said viewers were made aware that they did not have to compromise on quality or choice by making their purchase through PerfectHome. They also said that, in their experience, customers were keen to know which brands were available and because there were a number of price points within the product range available, customers were able compare and choose between items, having regard to affordability.
PerfectHome said the ad also contained clear, visible and prominent on-screen text, held for the duration of the ad which stated credit was “subject to status”. As such, they believed there was no suggestion that taking out credit was easy, or was a decision to be taken lightly. They disagreed that the ad could be seen as encouraging viewers to take out credit for any purchases that they may wish to make, frivolous or otherwise.
PerfectHome said they took their responsibility as a lender seriously and did not give credit where it was not affordable. In particular, they had a number of robust processes in place to assess and verify the customer's affordability and ability to repay their agreement over the agreed repayment plan. They explained that all customers were required to go through an application process which saw a proportion of applications declined following receipt of proof of income and expenditure. Furthermore, they said that as the retailer, they cancelled a high proportion of applications because applicants did not provide the correct or sufficient information to allow PerfectHome to complete the application process.
Clearcast said they worked very closely with the advertising agency to ensure that the ad complied fully in both the spirit and letter of the BCAP Code. They felt that the line “style up the kitchen with big brand appliances” was acceptable because it clearly referred to kitchen appliances featured: a fridge, cooker and washing machine in the visuals, which they believed were essential household appliances.
Clearcast believed that if the ad referred specifically to TVs and video games consoles, then the ad would have been problematic because those items would be classed as luxury goods. However, because that was not the case, they believed that the ad had been prepared with a sense of social responsibility.
Assessment
1. Upheld
The ASA noted that CONC rule 3.5.7 (1)(c) stated that an ad must include an RAPR if it included an incentive to apply for credit or enter into an agreement under which credit was provided.
In the context of a rent-to-own retailer, we understood that “weekly payments” were the norm. However, we considered this particular ad went further because it described them as “low”. Additionally, the ad referred to the fact that consumers did not have to pay a deposit. We therefore considered the claims “low weekly payments” and “no deposit” could be seen as incentives by viewers to take out credit with PerfectHome. As such, we considered the inclusion of those claims in the ad triggered the requirement to include an RAPR. The BCAP Code stated that ads such as this were acceptable only if they complied with the requirements set out in CONC. Because we understood that CONC required the ad to include an RAPR, and it had done so, we considered the ad complied with the Code in that regard.
We noted that CONC rule 3.5.7(2) required that an RAPR was to be given no less prominence than the information which triggered its inclusion. In the ad, the RAPR was presented in bold font, it was larger than the other information which appeared as on-screen text at the bottom of the screen, and appeared consistently on screen for almost all of the ad’s duration. In addition, we understood the line height of the RAPR was taller than the text that appeared in both roundels on screen.
We acknowledged that including the RAPR in that way made it reasonably prominent within the ad. We recognised that its font size was larger than that which appeared in the roundels, and that its duration of hold was also longer than the time for which the roundels featured on screen. However, we noted the roundels appeared on screen for five and three seconds, were brightly coloured and appeared alongside high value ticket items such as large reclining family sofa and kitchen appliances. In those circumstances, we considered the incentives were presented quite prominently.
We also considered that information communicated verbally to viewers would generally be seen as being more prominent than the on-screen text. We noted that, in this particular case, the use of such on-screen text to present the RAPR was unlikely to meet CONC’s requirements that it be given no less prominence than the incentive which triggered its inclusion, namely a voice-over and roundels. For that reason, we considered the ad was unlikely to comply with CONC’s requirements and in that regard, we concluded it 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. (Lending and credit).
2. Upheld
The ASA acknowledged that while PerfectHome was advertising the range of goods it stocked as a retailer, we considered the voice-over references to “low weekly payments”, references to an RAPR, and “subject to status” were likely to be understood by viewers that credit (in some form) would be required to purchase those items. We therefore considered consumers were likely to interpret the ad in that context.
We noted the ad featured a number of high value items such as sofas, a large family reclining sofa, kitchen appliances, a 4K television and a PS4 games console, which we understood was a representative selection of the goods available from PerfectHome. In addition, the voice-over referred to “style up the kitchen with big brand appliances” and “get your hands on loads of big name brands”, all of which we considered reflected that PerfectHome had a wide and varied range of items available to buy.
Although we recognised that some items featured would be considered essential, such as kitchen appliances or some furniture items, we considered that some of the featured items might be seen by viewers as high value, non-essential items such as the 4K television, PS4 games console, and the large reclining sofa. In addition, we noted the voice-over referred to “loads of big name brands” and “big brand appliances”, which we considered highlighted the more expensive price points of those essential items and drew particular attention to their desirability.
We considered the combination of references to ‘brands’ and featuring high value non-essential items implied that those could be purchased by consumers on borrowed monies. Notwithstanding the procedures PerfectHome had in place during their application process, we considered the ad presented a casual attitude to taking out credit. We therefore concluded the ad was socially irresponsible and breached the Code.
On this point, the ad breached BCAP Code rule 1.2 (Social responsibility).
Action
The ad must not be broadcast again in its current form. We told Temple Retail Ltd to ensure its advertising complied with the requirements of CONC and take care to ensure it did not present borrowing in a socially irresponsible manner.
