A TV ad for Help-Link, a boiler replacement company, seen in May 2016, showed a woman getting out of the shower as she shouted to her partner "Dave, the boiler's gone" and their boiler was shown running away from the house. The voice-over stated "You could have a fully installed boiler from just £1899, with nothing to pay until 2017". On-screen text stated "Help-Link UK Limited is authorised and regulated by the Financial Conduct Authority ... for credit broking ... Credit subject to status...".
The viewer challenged whether the ad was required to state a representative APR (RAPR).
Help-Link UK Ltd believed that the ad was compliant with the BCAP Code and the Financial Conduct Authority's (FCA) Consumer Credit Sourcebook (CONC), and more specifically CONC rule 3.5.7 (1) (c) the obligation that "A financial promotion must include the representative APR if it … includes an incentive to apply for credit or to enter into an agreement under which the credit is provided". They did not believe that they incentivised viewers to apply for credit by using the wording "…with nothing to pay until 2017". They thought the incentive was to purchase a boiler and highlighted that if the purchase was made within the right timescales then the purchaser would pay 0% interest. Because the interest was 0% they thought that CONC 3.5.7 (3) (b) came into force, which stated that the requirement for an APR did not apply to a financial promotion "… for a credit agreement in respect of which the APR is 0%".
They said the ad also included the disclaimer "Credit is subject to status" for the offer "…with nothing to pay until 2017". That was because any customer applying for credit would be assessed on an individual basis. If a consumer wanted to proceed with the “buy now pay later” offer, the full terms would be explained, including the fact that the APR was 0%.
Clearcast said at script stage they had asked the advertiser to consult with a legally qualified person to confirm that the proposed legal text was correct for the financial promotion on offer. They provided a copy of the consultant's response which said the ad was compliant with the requirements of CONC 3 that financial promotions were clear, fair and not misleading. They said they had cleared the ad on that basis.
The ASA noted that CONC 3.5.7 (1) (c) required ads to specify an RAPR if they included any incentive to apply for credit or to enter into an agreement under which credit was provided. We understood that the specified RAPR needed to be representative of the rate that 51% of customers, who secured credit agreements as a result of responding to the ad, would receive.
We sought comments from the FCA regarding whether the statement "…with nothing to pay until 2017", which appeared in the voice-over, would be considered to be an incentive under CONC section 3. They stated that in their view it was an incentive and therefore triggered the requirement to include an RAPR.
We noted Help-Link UK Ltd's comments that, as stated in CONC 3.5.7 (3) (b), the requirement to include an RAPR did not apply to credit agreements with an APR of 0%. Hence they believed that even if the claim "…with nothing to pay until 2017" was judged to be an incentive, given that customers could pay 0% interest, the ad was compliant. We understood, however, that Help-Link UK Ltd offered a number of finance options, and allowed customers to spread the cost of their boiler over three, four, five or ten years, with an RAPR starting from 12.9%. Further, in relation to the “buy now pay later” offer, we understood that although a 0% APR option was available if a customer paid the balance for their boiler within nine months after the installation of the goods, if they did not pay the balance on time then interest would be payable backdated to the date of installation of the goods with an RAPR of 19.9%.
The FCA stated that even though a 0% APR option was available, because the credit agreement for the offer included terms relating to the cost of credit, those costs needed to be reflected in the RAPR.
We considered that the inclusion of "…with nothing to pay until 2017" could encourage viewers to purchase a boiler with Help-Link UK as they could delay payment. Therefore, we considered that the claim acted as an incentive to viewers to apply for a credit agreement with Help-Link UK Ltd. We understood that while it was possible for customers taking advantage of the offer to pay 0% APR if they paid the balance for their boiler within a set period of time, an APR of greater than 0% would apply for customers who did not pay off their balance within that time frame. Therefore, we understood that it would not always be the case that consumers taking up the offer would benefit from a 0% APR credit agreement. For those reasons, we considered that the ad should have included an RAPR. Because it did not, we concluded that the ad breached the Code.
The ad breached BCAP Code rule14.11 (Financial products, services and investments).
The ad must not be broadcast again in its current form. We told Help Link UK Ltd to ensure any ads which featured an incentive to enter into a credit agreement, where the interest rate was greater than 0%, included an RAPR.