Ad description
A TV ad for a payday loans company featured a man, who was a consultant and who said, "What I didn't estimate properly is how hard it is to get paid from corporate clients. I'd done six months work and just didn't get paid, so it caused enormous stress at home ... and the banks have just got harder and harder. The Money Shop was on the High Street, so I decided to pop in and find out what it was and what it was all about. I just needed a bit of extra help and the Money Shop said 'well, yes, we can help in this way.' It's the first place I think of now without any concerns or worries at all."
On-screen text accompanied the man speaking and stated "Guy is a consultant. Guy needed money while waiting for a client to pay. £100 stood in the way of Guy getting new business".
Further on-screen text stated "Loans subject to status and affordability. 18+. Terms and conditions apply. Don't over commit, always borrow the amount you are able to repay on time".
Issue
A viewer challenged whether the ad was misleading because it did not include the representative APR (Annual Percentage Rate) of the loan.
Response
Instant Cash Loans Ltd (the Money Shop) said regulation 6 of the Consumer Credit (Advertisement) Regulations 2010 (the Regulations) detailed when consumer credit ads were required to state the representative Annual Percentage Rate (APR). They believed there was nothing in the ad which triggered the requirement under that regulation and therefore, they were not legally required to include it.
The Money Shop said the customer in the ad was reciting, in his own words, his experience of the difficulties he faced because he had not been paid by his clients, and that the Money Shop was able to help him at a time of real need. They did not believe his reference that "... banks have just got harder and harder" was a suggestion that his access to credit was restricted or that credit from them was available to those people who might otherwise consider their access to credit restricted. That reference should be considered in the context of what he had just said before that statement; he had just talked about his stress at home and financial pressures he experienced because his clients had not paid him on time. They said his comments related to his own financial pressures and that he felt his own bank was generally not accommodating and supportive.
The Money Shop said no other triggers appeared in the ad – it did not include any incentive to apply for credit nor did it indicate that the terms offered by them were more favourable than terms offered by other lenders.
Clearcast queried the absence of the representative APR before clearing the ad. They received an assurance from the Money Shop which explained that information was not required because the ad did not include an incentive nor did it display the cost on credit; conditions which required the representative APR to be included. They cleared the ad on the basis of that assurance.
Assessment
Upheld
The ASA sought advice from the OFT on the Regulations.
The OFT said that the requirement to include a representative APR under regulation 6 was triggered if the ad indicated that credit was available to individuals who might consider their access to credit restricted. They added that the requirement applied even if in reality that was not the case, rather the key question was whether the individual considered that it was restricted. For example, an individual might believe that they were unable to obtain finance from high street lenders or could do so only on less favourable or restricted terms. This might be because they had an impaired credit rating (e.g. because of arrears or county court judgments) or a low credit rating (e.g. because of a poor history of employment or because their income through self-employment was irregular or difficult to verify).
The OFT thought the customer's reference to the "banks getting harder and harder" indicated that he might have thought he could not obtain money from traditional sources, such as high street banks, because he was (or appeared to be) self-employed with an unreliable source of income. In their view, the ad indicated that credit was available to customers who might consider their access to credit restricted and therefore, it did trigger the requirement to include a representative APR.
We understood the ad was not required to include a representative APR unless it met one of the conditions set out in regulation 6. We considered the customer's reference to it becoming harder to borrow money from the banks was likely to be interpreted by viewers to mean he thought he may not be able to borrow money from the bank. We considered that statement implied that he thought his access to credit could be restricted which we understood would trigger the requirement to include a representative APR. Because it had not been included, we concluded the ad breached the Code.
The ad breached BCAP Code 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).
Action
The ad must not be broadcast again in its current form. We told the Money Shop to ensure that its advertising complied with the relevant consumer legislation.
