Background
This ruling forms part of a wider piece of work on unregulated investments. The ad was identified for investigation following intelligence gathered by our Active Ad Monitoring system, which uses AI to proactively search for online ads that might break the rules. See also related rulings published on 3 December.
Summary of Council decision:
Two issues were investigated, both of which were Upheld.
Ad description
Two paid-for Facebook ads by an art investment company:
a. The first ad, seen on 9 May, contained the text “While markets swing, some investors go tangible. Contemporary art offers stability, upside, and cultural value – and this free guide shows how to get started. No Jargon, just practical insight”. The ad also contained a link which was titled “How the Wealthy Invest In Art”. and an image of a framed picture, with the wording “Salvador Dali LE close, for Aurelia est. value: £20k – Sold for £93K 368.75% ROI”.
b. The second ad, seen on 18 June also contained the same text as ad (a) and featured an image with text that stated “WHY INVEST IN ART? Build A Solid Tangible Hedge Against Inflation” and “10-15% TARGET RETURNS”.
Issue
The ASA challenged whether the ads:
- were misleading because they did not make clear material information about the risks of the investments; and
- breached the Code because they did not make clear the value of investments was variable?and that ad (a) did not make it clear that past performance did not necessarily give a guide for the future.
Response
1. and 2. Hartco Consultancy said that since being notified of this investigation, they added a risk disclosure disclaimer to the landing page that linked from their ads, and to their survey.
They also said they had removed the claim "Hedge Against Inflation", and references to that phrase from their advertising.
They said that following contact from the ASA , they had acted to bring all consumer facing material into line with the Code and had withdrawn the ads.
Assessment
1. Upheld
The CAP Code required that material information should not be omitted and should be presented clearly.
The ASA understood that the physical art investment market was not regulated within the UK, nor was it subject to the protections afforded by the Financial Services Compensation Scheme or the Financial Ombudsman Service. We considered that was material information that consumers required in order to make informed decisions about Hartco Consultancy’s services. Both ads, which were Facebook ads, were limited by space, contained no information stating that art investment was unregulated. The ads linked through to a landing page which also did not contain that information.
Ad (a) stated, “While markets swing, some investors go tangible” and “How the Wealthy Invest In Art”. The ad also included a previous return on investment for a piece of art, which we considered consumers would understand as a performance indicator for investment through Hartco Consultancy.
Ad (b) stated, “WHY INVEST IN ART? Solid Tangible Hedge Against Inflation” and also stated targeted performance returns. They were therefore ads for an investment product. However, they contained no information stating that art investment was unregulated.
Because the ads did not make clear that art investment was unregulated, we concluded they were misleading. We noted also that the information did not appear at all, on the linked landing page.
On that point, the ads breached CAP Code (Edition 12) rules 3.1 and 3.3 (Misleading advertising).
2. Upheld
Section 14 of the CAP Code, which reflected rules prescribed by the Financial Conduct Authority (FCA) on promotional material for regulated investments, required that financial marketing communications not regulated by the FCA should make clear that the value of investments was variable and, unless guaranteed, could go down as well as up. In addition, it required that marketing communications for investments should make clear that past performance or experience did not necessarily give a guide for the future. If they were used in marketing communications,?examples of past performance or experience should not be unrepresentative.
Given the greater potential for significant financial harm resulting from financial marketing communications, those rules were additional to and more prescriptive than the rules on misleading advertising. That meant that relevant risk warnings prescribed by section 14 of the CAP Code needed to be in the initial ad and not later in the consumer journey, for instance on a landing page. We also noted that FCA guidance for regulated investments in social media stated that firms should ensure that where possible, information that was required to be prominent be displayed without needing to click through, or any other optional action, to view it.
Ads (a) and (b) did not include any risk warning to make clear that investments could go down as well as up.
In addition, ad (a) stated “Salvador Dali LE close, for Aurelia est. value: £20k – Sold for £93K 368.75% ROI”.
Therefore, ad (a) referred to the previous performance of art, and we considered the implication from the ad was that it was likely to perform in the same way in the future. We noted, however, that the ad contained no information to explain that past performance was not a guide for the future. In addition, we had seen no evidence that the sale was a representative one.
Because ads (a) and (b) did not include any risk warning to make clear that investments could go down as well as up, and ad (a) did not indicate that past performance did not necessarily give a guide for the future, and referenced an example of past performance that was not demonstrated to be representative, we concluded that it breached the Code.
On that point, the ads breached CAP Code (Edition 12) rule 14.4 (Financial products) and ad (a) breached CAP Code (Edition 12) rule 14.5 (Financial products).
Action
The ad must not appear again in the form complained about. We told Hartco Consultancy to ensure that future marketing made clear that art investment was unregulated. We told them to make clear that the value of investments was variable and could go down as well as up, and that examples of past performance or experience were not necessarily a guide to the future. Examples of past performance or experience should also not be unrepresentative.
