Shakespeare warned us that not everything is as valuable as it might at first seem and that certainly seems to be the case in a recent string of ASA rulings on ads offering gold as an investment. Promising glittering returns and endless riches can be very risky so we’ve polished up the lessons from the recent cases to ensure that ads don’t promise more than they can deliver.
An unregulated investment
The physical gold market is not regulated in the UK and it’s not subject to the protections afforded by the Financial Services Compensation Scheme or the Financial Ombudsman Service. Ads that don’t make that clear are likely to mislead.
Risk warnings
Financial ads carry with them a greater risk of significant financial harm than most ads in other sectors and the rules in section 14 of the Code are more prescriptive than those on misleading advertising. They reflect the rules prescribed by the Financial Conduct Authority (FCA) on promotional material for regulated investments and require ads to make clear that the value of investments is variable and, unless guaranteed, could go down as well as up.
Competitions
Not all ads look like investment ads; in this ruling on an ad headlined “The fastest growing investment competition site!” the ASA acknowledged that by entering the competitions, consumers were not directly purchasing gold and precious metals for investment. But because they were paying for the chance to win gold prizes that were described as investments, the ad was for an investment product.
Jewellery
Most jewellery is not sold as an investment in ads, but where it is, the same rules apply. Claims like “Wearable Investments” and “platinum investment-grade jewellery” were found to present the products as having investment characteristics and implied that consumers could expect future financial gain from buying them.
Books and guides
Offering a book or guide on gold investments doesn’t exempt you from the rules either. The ASA ruled that an ad offering “YOUR GUIDE TO INVESTING IN PHYSICAL GOLD”. That stated “Discover why more investors are turning to gold…” and “Whether you’re just starting or diversifying a portfolio, gold gives you control in uncertain times” was an ad for an investment product and therefore subject to the rules above.
So now, in the words of Spandau Ballet; "You've got the power to know. You're indestructible! Gold!." But if you’re not sure, CAP’s Copy Advice team is always happy to help polish the tarnish off any non-broadcast advertising.
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