Ad description
Three TV ads for Lending Stream, a payday loans company, seen in May 2016, featured a man called Lenny rowing a boat down a river:
a. In the first ad, Lenny stated, "Get your ducks in a row." He then said, "Apply now for a loan of up to £1,500 and receive your funds within minutes. Lendingstream.co.uk. Representative APR 1,272%." On-screen text included "Representative 1,272% APR".
b. In the second ad, he stated, "Don't be up the creek without a paddle", and then repeated the same information and on-screen text as ad (a).
c. In the third ad, Lenny stated, "Here at the Lending Stream, we use our level headed approach to lending to help folks like Sue who just needed to get her ducks in a row. To Dave, who was up the creek without a paddle." He then said, "How's the new paddle working out Dave?", and another man on a separate boat replied "Smooth, Lenny, smooth." He then said, "Being level headed, we check to see how much people can afford and then give them six months to pay it back. Apply now and receive your funds within minutes at Lendingstream.co.uk. Representative APR 1,272%." He said "You got the washing machine fixed!" A female voice replied "Sure did, thanks Lenny." On-screen text included "Representative 1,272% APR".
Issue
The viewer, who noted that the ads included a representative APR (RAPR) but not a representative example, challenged whether they breached the Code.
Response
Lending Stream noted rule 3.5.3 (2) of the Financial Conduct Authority's (FCA) Consumer Credit Sourcebook (CONC). This stated that ads for consumer credit that indicated a rate of interest or amount relating to the cost of credit were exempt from including a representative example if the RAPR was the only rate of interest or amount relating to the cost of credit in the ad and if the RAPR was required to be included in the ad due to the inclusion of certain triggering information. Such information included an incentive to apply for credit or to enter into an agreement under which credit is provided and a favourable comparison relating to the credit, whether express or implied, with another person, product or service. Lending Stream believed that the ads contained those triggers, and therefore a representative example was not required.
Lending Stream said that the focus on help in the claim "level headed approach to help folks" in ad (c) followed by examples of how the advertiser had helped customers might be considered an incentive as it was likely to persuade or influence people to apply for credit. They said that the prominence of their trading name, website and logo in ads (a) to (c) could also amount to an incentive trigger under CONC 3.5.8 (1). In addition, the claim "six months to pay it back" was likely to amount to an incentive because it was a prominent feature of ad (c), and was therefore likely to persuade or influence customers to apply for credit with them.
Lending Stream argued that the claims "apply now" and "funds within minutes" in all of the ads constituted incentives to apply for credit because they focused on the speed at which applications could be processed and granted, and at which the funds could be made available to customers.
Lending Stream also referenced a previous ASA ruling, which concluded that an ad had contained a comparative indication because it presented certain features which were unique to that particular advertiser. Therefore, Lending Stream believed that the emphasis on their "level headed approach" implied a unique feature of their service, and so constituted a favourable comparison.
Clearcast supported Lending Stream's comments. They said that the claims "apply now for a loan" and "receive your funds" were clear incentives to apply for credit, and therefore believed that the ads did not require the inclusion of a representative example.
Assessment
Not upheld
The ASA noted that the RAPR was the only rate of interest featured in ads (a) to (c), and considered the ads did not feature any claims that constituted a cost of credit. As such, we understood that Lending Stream were not required to include a representative example if they included any information which triggered the requirement to include an RAPR, such as an incentive to apply for credit or a favourable comparison.
CONC 3.5.8 (4) clarified that "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". We considered the examples provided in ad (c), such as the customer who fixed her washing machine, provided viewers with examples of unexpected circumstances that could give rise to them needing to take out credit. However, we considered those examples were unlikely to persuade, influence or otherwise incentivise customers to apply for credit. In addition, we considered the claim "level headed approach to help folks" was unlikely to be seen as incentive, and would instead be interpreted as a description of their approach to loan applications.
We acknowledged that CONC 3.5.8 (1) stated that a firm's trading name, website address or logo could contain the triggering information. Although we considered the trading name "Lending Stream" in ads (a) to (c) indicated that the primary function of the service was to lend money, we considered the name did not constitute an incentive to apply for credit; rather, it merely provided an indication of the nature of the service.
We considered that the claim "six months to pay it back" in ad (c), however, was likely to encourage viewers to apply for a loan on the basis that they could delay payment for a significant amount of time, and therefore acted as an incentive to viewers to apply for a credit agreement with Lending Stream.
CONC 3.5.8 (4) indicated that claims about the speed at which funds could become available could constitute an incentive to apply for credit depending on the context of the statement and the circumstances in which it was made. We considered that the opportunity to receive "funds within minutes" referenced in ads (a) to (c) was likely to influence customers to apply for credit with Lending Stream due to the short space of time at which they could receive credit, and therefore amounted to an incentive. In addition, we understood that not all lenders offered credit within such a short space of time, and therefore considered that the claim also constituted a favourable comparison.
We further noted that the claim "level headed approach" in ad (c) was preceded by "here, at the Lending Stream", which we considered was likely to be interpreted to mean that the "level headed approach" was unique to the advertiser. Accordingly, we considered that it was also likely to be interpreted as a favourable comparison against other lenders.
Each ad therefore included information which triggered the inclusion of the RAPR, while the RAPR was the only rate of interest featured with no reference to a cost of credit. We therefore concluded that the ads were not required to include a representative example, and were therefore compliant with the Code.
We investigated the ads under BCAP 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), but did not find them in breach.
Action
No further action necessary.
