A TV ad for ClearScore, a financial technology company, seen in January 2020, featured two men, one of who was morphed with a zebra’s head and tail, against a backdrop of mountains and a lake. The man with a zebra’s head pointed to the sky where a graphic of a transparent bubble appeared. Inside the bubble was the text “Your credit score is” and beneath, a credit score which gradually increased appeared, with the text “out of 700” underneath. Smaller text below stated “moving on up”. A voiceover stated, “ClearScore shows you pre-approved offers on credit cards, loans and more ...” The camera zoomed in on the bubble and a credit card appeared inside it.
Small superimposed text at the bottom stated “18+ Registration required. T&Cs apply”. The voiceover continued, “… all from trusted lenders.” Large text appeared in front of the screen with the ClearScore name and logo. Smaller text underneath stated “Your credit score and report, for free, forever”, followed by the Apple and Google app logos. The voiceover ended with “Download the app for free today.”
IssueThe complainant, whose application for a pre-approved loan was declined, challenged whether the claim “ClearScore shows you pre-approved offers on credit cards, loans and more …” breached the Code.
Clear Score Technology Ltd said that the claim “ClearScore shows you pre-approved offers on credit cards, loans and more …” was not misleading. They said that the decision to pre-approve an individual was made solely by the lender. When a customer accessed a list of available pre-approved loan offers on ClearScore, ClearScore would send financial information about that customer, through an Application Programming Interface (API), directly to the lenders offering loans. The lenders would then run these details through their scorecards and would provide their results via the same API.
This process was almost instantaneous and, depending on the lender’s credit policy, if the response was positive, then the customer would be able to see on ClearScore, the terms on which they had been pre-approved by the lender. They said that the customer data they passed on to lenders depended on a case-by-case basis as lenders would firstly see what data they could extract through their API.
Ordinarily, the data shared would be a customer’s first name, last name, email address and date of birth. Other types of data could include fields such as income, monthly expenditure, residential status, employment status, requested loan term/amount, and monthly rent payments. With some lenders, this information was also passed on to them so that the application form could be pre-filled for the customer. They said that some lenders ran the details of customers through their “scorecards” to come up with an eligibility, either directly or through hosting scorecards with HD Decisions owned by Experian and in that case, they would share information with HD instead.
ClearScore explained that this was merely an eligibility decision, not a lending decision. If the outcome was pre-approved at this stage, this meant that based on the information provided, the customer had the likelihood of obtaining that product if the details were correct. The customer would subsequently be subject to lenders’ additional mandatory affordability and fraud checks. They said that the claim clearly stated that a person could see offers for which they had been pre-approved for by a lender in the ClearScore platform, and that lenders displayed these offers on ClearScore. They considered that their claim was therefore factually correct and that approximately 2.4 million people in the UK had seen pre-approved offers in this way. They acknowledged that the complainant was shown a pre-approved offer by a lender on ClearScore, which was subsequently rejected by the lender. ClearScore did not make any lending decisions and were not privy to lenders’ decision-making criteria.
As a regulated term, the decision to “pre-approve” was not up to the lender entirely and ClearScore therefore monitored the use of the term to ensure that it was compliant with the relevant regulations. ClearScore said that the Financial Conduct Authority’s (FCA) rules stated that a financial promotion must not state or imply that credit is available regardless of the customer’s financial circumstances or make any statement or implication that credit was guaranteed or pre-approved. They said that their ad only informed customers that such offers existed on ClearScore. They said that the financial promotion which the complainant was subsequently shown on ClearScore’s website was specifically addressed to him and included the disclaimer “This product is pre-approved for you. This means if all the details you’ve given us are correct and subject to additional checks, you’ll get this product” in relation to the pre-approved offer he received. They said that this statement was included because there were occasions when a lender could reject a preapproved applicant, the most common of which were where an applicant altered their details in the application form, the lender suspected the applicant of fraudulent activity or if the applicant did not meet assessments of creditworthiness. They said that they had contacted the lender in question and inquired as to why the complainant was rejected for the loan given that they were originally pre-approved.
The lender explained that the complainant had been informed that he did not meet the affordability criteria. The lender said that this was because they had tried several times to determine the complainant’s income but were unable to do so as the documentation submitted was insufficient. They said that under their affordability rules, the FCA had altered the credit assessment rules for lenders in November 2018 which now mandated that lenders could also take into account whether applicants could reasonably repay the loan. That was usually assessed by verifying the applicant’s income, which could not be done in the complainant’s case. ClearScore said that given that the complainant did not provide sufficient evidence to allow the lender to conduct its regulatory obligation of assessing affordability, they did not believe the lender had acted incorrectly in this case.
Clearcast stated that they had sought details from ClearScore about the pre-approval process and ClearScore confirmed that products were listed dependent on the information supplied by the applicant, or the likelihood of being accepted. Some of these offers would be pre-approved, which meant that the individual would be successful in obtaining the offer, as long as the details they had provided in their ClearScore application were correct, as well as being subject to the lender’s own fraud check. They said that they therefore felt the claim “ClearScore shows you pre-approved offers on credit cards, loans and more …” was factually accurate. They also said that this had been qualified by the superimposed text which included “T&Cs apply”.
Once pre-approved, the applicant would need to supply the necessary evidence to the lender to support the initial information provided on ClearScore, in order to ultimately obtain the loan. They considered that this was something the average consumer would consider to be self-evident and was not a material condition that would need to be explicitly stated in the advert.
ClearScore was a financial technology company which provided customers free access to their credit score and report. They also provided customers “offers” for pre-approved loans, credit cards and other financial products which were based on their credit history and borrowing behaviour.
The ASA understood that generally, “pre-approved” loan offers were made based on personal information an applicant provided to the lender, such as their income, employment status, or credit score for example. We consulted the FCA on the application of the relevant Consumer Credit Sourcebook (CONC) rules and guidance. CONC rule 3.3.1 stated that “A firm must ensure that a communication of a financial promotion is clear, fair, and not misleading”. Further, CONC rule 3.3.1 (d) stated that a firm must ensure a financial promotion “is sufficient for, and presented in a way that is likely to be understood by, the average member of the group to which it is directed ….”.
We considered that because ClearScore had used the term ‘pre-approved’ as a selling point in their financial promotions, they needed to ensure the use of this term was clear, fair and not misleading, irrespective of the fact they were not the ones making any lending decisions. We considered that the average consumer would understand the term “pre-approved” in the ad to mean that they were guaranteed to get any loan or product subsequently shown to them as pre-approved when using ClearScore’s services. We noted that the pre-approved offers would be dependent on personal eligibility, subject to the customer providing the correct financial information to ClearScore, and subject to a lender’s own checks. However, there was no information in the ad to indicate that further checks would be made following a pre-approved offer, which could result in the application being declined. Because the claim “pre-approved”, in the context of the ad, was likely to be understood to mean that customers who received “pre-approved” offers would be guaranteed to get those offers, when that was not the case, we concluded that the ad breached the Code.
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).
The ad must not be broadcast again in its current form. We told Clear Score Technology Ltd to ensure its advertising complied with the requirements of CONC. We told them to make clear in their broadcast advertising that the pre-approved offers shown by ClearScore would be subject to additional checks by the lender prior to approval.