Summary of Council decision:
Two issues were investigated, both of which were Upheld.
A TV ad for Sunny Loans, seen on 30 December 2017, promoted information about their short-term loans. The voice-over stated, “… you can turn to Sunny for some emergency cash. You have 5 days to change your mind, return the money and you won’t have to pay any interest.” Smaller on-screen text during the scene stated “Subject to status. T&Cs apply. 18+. Statutory right to cancel unaffected” and “Representative APR 1291%”. The final scene included the voice-over, “Loans from £100 and 5 days to change your mind”. On-screen text “Loans from £100 and 5 days to change your mind” and “Representative APR 1291%”.
1. Two complainants challenged whether the ad was misleading because they understood that consumers were allowed 14 days to return a loan under the Consumer Credit Act 1974.
2. The ASA challenged whether the ad breached the Code because the representative APR (Annual Percentage Rate) was not given adequate prominence as required.
1. Elevate Credit International Ltd t/a Sunny acknowledged that section 66a of the Consumer Credit Act 1974 (CCA) allowed customers 14 days within which to withdraw from their credit agreement. They said that the statutory right required customers to repay credit provided with any credit agreement and interest accrued between the date the money was provided and the date the money was repaid as set out in subsection 9 of section 66a of the Act.
Sunny said that the claim “5 days to change your mind” did not seek to replace the statutory right provided under the CCA. They said the ad was offering customers an opportunity to change their minds within the first five days of taking out a loan and pay no interest. They said that the option was in addition to a customer’s statutory right. They said that they were offering the option so that customers could feel comfortable with the decision they had taken.
Sunny argued that the ad made clear that customers could still rely on their statutory 14-day right. They highlighted the on-screen text which stated “Subject to status. T&Cs apply. Statutory right to cancel unaffected. Loans from £100 to £2500”. They argued that the text complied with all hold, size and other relevant requirements to put consumers on notice of the difference between the offer being made and the consumer’s statutory right. They highlighted that the text was on screen for a total of seven seconds in accordance with the duration of hold requirements for superimposed text. They said that the text size was 17 lines which was significantly larger than the minimum required and was shown in white text on a black stationary background.
Sunny said that the offer was intentionally contained within one single sentence to demonstrate how the offer was different from the statutory right, namely that consumers did not have to pay interest in respect of that five-day period. They said that the offer could not be separated into two distinct features because it was one feature, with further clarification at the latter part of the sentence.
Clearcast said that Sunny offered an added advantage to the 14 days offered under the CCA. They said that Sunny offered an additional five days to allow customers to change their mind and return the money without paying interest. They said that did not take away a customer’s legal right. They highlighted the legal text within the ad which stated “statutory right to cancel unaffected”. They also said that information about a consumer’s statutory right to withdraw was available on their website and set out all pre-contractual information provided with a loan.
2. Sunny acknowledged that the RAPR stated was required to be no less prominent than the material which triggered its display.
Sunny said that the trigger in the ad was the fact customers were given five days to change their mind and won’t have to pay any interest. They said that the claim appeared twice in the ad for a total of five seconds. They said that the RAPR was displayed for a total of 14 seconds which was almost half of the ad. They highlighted the RAPR at the bottom of the ad which was shown for eight seconds immediately prior to the first trigger and a further two times in the ad. They also said that the RAPR was shown in white text on a black static background
Sunny said that the RAPR was displayed using white text on a black ground to provide maximum prominence. They said that the text had a height of 22 in contrast to the minimum height of 14 TV lines during the ad.
Sunny said that visual representations were more relevant in TV ads and arguably a more prominent means to communicate information. They said that if the RAPR was included in the voice-over, it would likely be voiced for four seconds which would not give the same prominence as the RAPR’s current format. They said that if the requirement was for the RAPR to be included in the voice-over and on screen, this would re-introduce the old requirements of “greater prominence” under the Consumer Credit (Advertisements) Regulations 2010, which was replaced in April 2014 with the requirement to be no less prominent than the material which triggered its display.
Clearcast believed the representative APR was sufficiently prominent in the ads in accordance with The Consumer Credit sourcebook (CONC).
The ASA noted that the voice-over stated, “You have five days to change your mind, return the money and you will not have to pay any interest”. We considered that viewers would interpret the claim to mean that, after purchasing the loan, they only had five days in which they could withdraw from taking out the loan. We considered that impression was reinforced by the last scene of the ad, where the voice-over and prominent on-screen text stated “Loans from £100 and 5 days to change your mind”. We considered consumers would understand the claim to be a distinctive cancellation feature of Sunny Loans’ offer to consumers.
Whilst we acknowledged that the ad included on-screen text which stated “Subject to status. T&Cs apply. 18+ Statutory right to cancel unaffected”, we considered that consumers were unlikely to know what the specific statutory rights were that the text was referring to and therefore were unlikely to understand that they had a 14-day statutory right to cancel. Furthermore, the text was small and accompanied by other information, such that it was likely to be overlooked by viewers. We therefore considered the text was insufficient to counteract the overriding impression created by the ad that consumers only had five days to return the loan.
We understood that the CCA entitled consumers to withdraw from a credit agreement within fourteen days without giving any reason but customers were required to repay any credit provided and interest accrued on that period. Therefore, the claim “5 days to change your mind” was not a distinctive feature of the marketer’s offer because all consumers had that right in addition to a further nine days.
We acknowledged that the offer not to pay any interest if you returned the loan within the first five days was a distinctive feature from Sunny Loans. However, we considered that consumers would understand the five-day cancellation period to be a separate and distinctive feature offered by Sunny Loans.
Because the ad implied that the five days consumers had to change their mind was a distinctive feature of the marketer’s offer, when in fact it was a right given to consumers in law, we concluded that the ad was misleading.
On that point, the ad breached BCAP Code rules
The standards objectives, insofar as they relate to advertising, include:
a) that persons under the age of 18 are protected;
b) that material likely to encourage or incite the commission of crime or lead to disorder is not included in television and radio services;
c) that the proper degree of responsibility is exercised with respect to the content of programmes which are religious programmes;
d) that generally accepted standards are applied to the contents of television and radio services so as to provide adequate protection for members of the public from inclusion in such services of offensive and harmful material;
e) that the inclusion of advertising which may be misleading, harmful or offensive in television and radio services is prevented;
f) that the international obligations of the United Kingdom with respect to advertising included in television and radio services are complied with [in particular in respect of television those obligations set out in Articles 3b, 3e,10, 14, 15, 19, 20 and 22 of Directive 89/552/EEC (the Audi Visual Media Services Directive)];
g) that there is no use of techniques which exploit the possibility of conveying a message to viewers or listeners, or of otherwise influencing their minds, without their being aware, or fully aware, of what has occurred"
Section 319(2). (Misleading advertising) and 3.13 3.13 Advertisements must not present rights given to consumers in law as a distinctive feature of the advertiser's offer. (Exaggeration).
The ASA noted that CONC rule 3.5.7 (1) (c) and (2) stated that an ad must include a representative APR (RAPR) if it included, amongst other elements, an incentive to apply for credit and that the RAPR must be given no less prominence than the incentive to apply for credit.
We considered that the voice-over claim “You have five days to change your mind, return the money and you will not have to pay any interest” and the on-screen text in the last scene of the ad “5 days to change your mind” was an incentive to apply for credit as outlined in CONC rule 3.5.7 (1) (c). As such, the ad was required to include an RAPR with no less prominence than the incentive to apply for credit.
The RAPR was shown during two scenes, in white on-screen text on a black background at the bottom of the ad for approximately seven seconds each time and a total of 13.8 seconds, whereas the incentive to apply for credit was presented in the voice-over during the middle of the ad for five seconds and again during the last scene for three seconds. It was also shown in bold on-screen white text on a yellow background during the last scene for three seconds. We acknowledged that the on-screen text met the technical size requirements of general BCAP guidance. However, as the incentive was included in the voice-over and in prominent on-screen text in the last scene of the ad, while the RAPR only appeared in text at the bottom of the ad, we concluded that the RAPR had been given less prominence than the incentive to apply for credit, in breach of the Code.
On that point, the ad breached 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 appear again in its current form. We told Sunny to ensure that they did not suggest that statutory rights given to consumers were distinctive features of their offer. We also told them to ensure that the RAPR was given no less prominence than the incentive to apply for credit.