Background
Summary of Council decision:
Three issues were investigated, of which one was Upheld and two were Not upheld.
Ad description
Two direct mailings for CORGI HomePlan insurance:
a. An undated direct mailing advertising CORGI HomePlan insurance, received in February 2016, stated “Our winter sale offers you an exclusive CORGI HomePlan policy for your home which is less than half the price of comparable cover from HomeServe … This cover costs just £14 per month and we’ll hold this price for the next 3 years. Comparable cover from HomeServe is £30.39 per month”. Small print at the bottom of the letter stated “HomeServe Cover 8 also covers pests, security and roofing”. The reverse stated “Safety since 1968. In 1968 Ronan Point, a 22-storey apartment block in Canning Town, London, was devastated by a massive gas explosion that claimed five lives and injured many more. The explosion was attributed to unsafe gas work in one apartment, and led to a new determination to protect the public from unsafe gas work. The solution was the formation of CORGI in 1970 … With 45 years’ experience in providing professional services to industry CORGI is a recognised leader in gas safety”.
b. A direct mailing advertising CORGI HomePlan Insurance dated 29 October 2015, stated “Switch to CORGI HomePlan and we’ll keep your home safe and warm”. A table compared CORGI HomePlan to plans offered by HomeServe and British Gas. The product column for HomeServe stated “HomeServe Cover 8 plus annual service”. A column labelled “Average monthly premium over 2 years” showed a rate of £28.75 per month for the HomeServe plan and £17.50 per month for the CORGI plan. Small print at the bottom of the page stated “Excludes drainage. HomeServe Cover 8 priced at £19.50 per month for the first 12 months and £38 per month for the remaining 12 months, total cost £690 and also covers pests, security & roofing”.
Issue
HomeServe Membership Ltd (HomeServe) challenged whether:
1. ads (a) and (b) were misleading, as there were significant differences between the products being compared;
2. the claims about CORGI’s history in ad (a) were misleading and could be substantiated, as they believed that they implied that CORGI Homeplan Ltd had been operating since 1970; and
3. the claim in ad (b) that HomeServe Cover 8 cost £28.75 per month was misleading and could be substantiated.
Response
1. CORGI Homeplan Ltd stated that their various home insurance cover options comprised of bundled selections of nine different elements, with or without an annual boiler service. These elements were: central heating system; central heating boiler; boiler replacement; plumbing and electrics; internal drains and waste pipe; external drains; water supply pipes, gas supply pipes; and taps and toilets. The specific CORGI products described in the ads were special offers available only to the recipients of the direct mailings via the promotional codes provided.
The plan in ad (a) offered cover for boiler and full central heating system, heating controls, gas pipes, electrical circuits, hot and cold plumbing system, drains and water supply pipe, plus a free carbon monoxide alarm. CORGI said that this was similar to their “Advanced” cover option, but at a price of £14.00 per month held for three years. This product was compared against HomeServe Cover 8.
The plan in ad (b) offered cover for boiler and full heating system, heating controls, electrical circuits, hot and cold plumbing system and annual boiler service, plus a free carbon monoxide alarm. It was offered at a cost of £17.50 per month held for two years. This plan was compared against HomeServe Cover 8 including annual boiler service.
CORGI said that, based on their policy claims experience for bundled products, the key cover elements were the central heating system, boiler, plumbing and electrics. They stated that the Cover 8 product was the only bundled product offered by HomeServe which offered cover for these four key areas, with alternative products providing cover for the boiler or heating system alone, or providing cover for plumbing and electrics but with no cover for the heating boiler/system. They therefore established HomeServe Cover 8 as the closest match in terms of a “like for like” comparison.
CORGI stated that they considered the comparisons to have been entirely clear and justified. They said that both the CORGI Homeplan and HomeServe Cover 8 products were intended to cover the main aspects of the maintenance of domestic central heating, plumbing and electrical systems, including boiler replacement. They accepted that there were some differences between the two products, but considered these to be minor in nature. They stated that they had detailed the additional services offered by the HomeServe Cover 8 product in the footnote that featured in both ads, which stated “HomeServe Cover 8 also covers pests, security and roofing”. They said that the ads made clear that CORGI HomePlan cover was subject to applicable limitations and exceptions. Therefore they asserted that the comparison between the two products was not misleading. They stated that the comparisons objectively compared the price of the two products, and the method for calculating the price was clearly set out in the advertising. The ads stated that the prices were correct at the time of going to print and that customers could check competitor websites for further details.
2. CORGI stated that the text on the reverse of ad (a) explained the evolution of CORGI as the gas regulator from its foundation in 1970 until it was superseded by the Gas Safe Register in 2009, and the continued activities of CORGI in industry. They said that the final paragraph of the letter specifically stated that CORGI HomePlan was launched in January 2011 to provide homeowners with cover for boiler breakdowns, scheduled servicing and home emergencies. They stated that the information contained in the ad did not imply that CORGI HomePlan had been operating since 1970, and therefore they did not believe that the ad was misleading.
3. CORGI said that ad (b) referred to a two-year fixed price offer for the CORGI HomePlan product of £17.50 per month. It compared that price to the average monthly premium over two years for the HomeServe Cover 8 product, as indicated in the table. This was calculated based on the HomeServe Cover 8 price of £19.50 per month for the first 12 months and then £38 per month for the remaining 12 months. This resulted in a total cost of £690, which, averaged over 24 months (or two years), equated to £28.75 per month. The pricing details were taken from the HomeServe website on 1 October 2015, for which they provided a screenshot. CORGI stated that the basis of the comparison and the method of calculating the price were made clear in the footnote. On that basis, they did not believe that the ad was misleading.
Assessment
1. Upheld
The ASA noted that both CORGI HomePlan and HomeServe offered a number of home cover options, which provided insurance cover for different ranges of services. We noted that ad (a) referred to “comparable” cover from HomeServe, while ad (b) visually compared different aspects of the CORGI package with products offered by two competitors. We considered that consumers would understand ads (a) and (b) to compare the advertised products with competitor insurance packages covering a similar range of elements of general home maintenance.
We noted that the insurance packages described in ads (a) and (b) covered the respective elements listed by CORGI in their response, all of which were also covered by HomeServe Cover 8. We also noted that the HomeServe plan covered pests, security, roofing, and repairs to dripping taps and running toilets, none of which were covered in either of the CORGI plans. In addition, the plan in ad (b) did not include cover for the water supply pipe, gas supply pipe or drains, elements that were covered by the HomeServe plan.
We acknowledged that CORGI considered that the key elements of combined home cover were the central heating system, boiler, plumbing and electrics, all of which were included in the two products advertised, and that they had sought to compare their products against the only available HomeServe product that included all four of those elements. We noted that the HomeServe plan also included cover for a number of elements of household repair that had the potential to result in a significant level of expense for householders, and that were not covered by one or both of the CORGI plans. While we considered that two products of this type, which were composed of disparate elements, could cover a similar range of services while exhibiting some differences, the advertiser needed to make those differences clear to avoid misleading consumers. We acknowledged that ad (a) included a footnote stating “HomeServe Cover 8 also covers pests, security and roofing” and ad (b) featured small text stating “Excludes drainage. HomeServe Cover 8 … also covers pests, security and roofing”. However, we considered that the size and placement of the text was not sufficiently prominent to make these qualifications clear to consumers. Furthermore, there was no reference to the exclusion of tap and toilet repairs in ad (a) or water and gas supply pipe repairs in ad (b). In the absence of sufficiently clear and prominent qualification, we considered that consumers were unlikely to understand the additional elements of cover that were included in the HomeServe plans but not in the CORGI plans. We therefore concluded that the comparisons were misleading.
On this point, ads (a) and (b) breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
3.3
3.3
Marketing communications must not mislead the consumer 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 the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means.
(Misleading advertising),
3.9
3.9
Marketing communications must state significant limitations and qualifications. Qualifications may clarify but must not contradict the claims that they qualify.
3.10
3.10
Qualifications must be presented clearly.
CAP has published a Help Note on Claims that Require Qualification.
(Qualification) and
3.33
3.33
Marketing communications that include a comparison with an identifiable competitor must not mislead, or be likely to mislead, the consumer about either the advertised product or the competing product.
(Comparisons).
2. Not upheld
We understood that the Council for Registered Gas Installers (CORGI) was established in 1970 as a voluntary registration scheme. Between 1991 and 2009, it operated as the gas regulator and registration was a legal requirement. In 2009, this role was taken over by the Gas Safety Register, though the CORGI brand still operated a range of commercial services. The ad described the events that contributed to the creation of CORGI (the registration body) and the evolution of this entity over the years into commercial and charity organisations that built on the reputation of the original regulator. We noted that the ad specifically stated that CORGI HomePlan was launched in 2011. We considered that the connection drawn between CORGI, the former gas regulator, and CORGI Homeplan, the home insurance provider, was accurate and justified given the brand’s history, and did not imply that CORGI Homeplan itself had been operating since 1970. We therefore concluded that the ad was not misleading on this point.
On this point, ad (a) was investigated under CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising) and 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation), but we did not find it in breach.
3. Not upheld
We understood that the cover plan described in ad (b) was available only to recipients of the direct mailing at a fixed monthly price of £17.50 for two years. The HomeServe plan with which it was compared had, at the time, been priced at £19.50 per month for the first 12 months, and then £38 per month if renewed for another year. Across the two years, the monthly average came to £28.75. We noted that the column in which the monthly prices appeared was labelled “Average monthly premium over 2 years”, and more detailed information on the way that the monthly cost was calculated was explained in a footnote. We therefore considered that consumers were likely to understand the basis for the figure. For that reason, we concluded that the ad was not misleading on this point.
On this point, ad (b) was investigated under CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
3.3
3.3
Marketing communications must not mislead the consumer 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 the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means.
(Misleading advertising),
3.7
3.7
Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation.
(Substantiation),
3.9
3.9
Marketing communications must state significant limitations and qualifications. Qualifications may clarify but must not contradict the claims that they qualify.
and
3.10
3.10
Qualifications must be presented clearly.
CAP has published a Help Note on Claims that Require Qualification.
(Qualification), but we did not find it in breach.
Action
Ads (a) and (b) must not appear again in the forms complained about. We told CORGI Homeplan Ltd to ensure that comparisons with identifiable competitors used in their advertising made all significant differences between products clear to consumers.
