Summary of Council decision:
Two issues were investigated, one of which was Upheld. The other was informally resolved after Funding Circle agreed to withdraw the claim.
A TV ad for Funding Circle loans, seen on 3 March 2019, featured a voice-over which stated, "Join the thousands of businesses who've taken out a Funding Circle loan with rates from 1.9% per year". On-screen text stated "Rates from 1.9% per year".
One complainant, who understood that a personal guarantee was required to take out a loan, challenged whether the ad was misleading for not stating that information.
Funding Circle Ltd said they offered loans of various sizes, on a secured and non-secured basis, each with different lending criteria and conditions to be satisfied. They said borrowers were made aware of all material conditions attached to their specific loan request, including where personal guarantees were required. They said the requirement to provide a personal guarantee only applied to individuals associated with limited companies.
They said the ad stated "Ts & Cs apply” but that the act of business lending was not simple and they did not think it was possible to describe all material terms and conditions in a 30-second ad. They believed it was standard market practice to require similar forms of personal guarantee in relation to certain loans and did not believe potential clients would be surprised by it. Clearcast had no additional comments to make.
The ASA acknowledged that applicants might be aware that a personal guarantee may be necessary for some business loans. However, we disagreed with Funding Circle that it was not necessary to flag it in the ad as a possibility to applicants. If the company was a limited company, for example, applicants might not expect to be personally liable. We considered the possibility that a personal guarantee would be required in a business loan was material information that needed to be stated in an ad. Because it was not, we concluded that the ad was likely to mislead.
The ad breached BCAP Code rules
Advertisements must not materially mislead or be likely to do so.
Advertisements must not mislead consumers 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 consumers need in context to make informed decisions about whether or how to buy a product or service. Whether the omission or presentation of material information is likely to mislead consumers depends on the context, the medium and, if the medium of the advertisement is constrained by time or space, the measures that the advertiser takes to make that information available to consumers by other means. (Misleading advertising).
The ad must not be broadcast again in the form complained of. We told Funding Circle Ltd to ensure ads stated information that was likely to be considered material for potential applicants for example, that a personal guarantee might be required for some loans.