Summary of Council decision:
Two issues were investigated, both of which were Upheld.
A TV ad for a payday loans company featured a voice-over which stated, "Even with the best training, keeping an eye on our money can be a bit of a tease, and if you're looking at your finances, The Money Shop can point you in the right direction." On-screen text then switched from "All loans are subject to credit and affordability checks so not all customers may be eligible for a £1000 limit. Maximum £500 for new online customers. Customers must be 18+. T&Cs apply" to "2961.4% APR (variable) representative" and the voice-over continued, "Loans up to £1,000 available online or from your local store, and applying for one is a walk in the park. So if you're experiencing one of life's little ups and downs, apply online through [website address]." A yellow circle with the text "£5 Cashback for every £100 borrowed" then appeared on screen, accompanied by the voice-over statement, "And when you pay back in full on your original due date, we'll give you £5 cashback for every £100 you borrow."
1. Two complainants challenged whether the ad was irresponsible, because it presented a payday loan as a way of addressing financial concerns; and
2. The ASA challenged whether the representative APR (RAPR) was sufficiently prominent.
1. Instant Cash Loans Ltd, t/a the Money Shop, responded jointly with their advertising agency. They did not consider that the ad suggested that the Money Shop would provide financial advice. They stated that the primary aim of the ad was to increase customer awareness that short-term loans were available from the Money Shop both in store and online, and the online availability was clearly referenced both visually and verbally. They said the wording "The Money Shop can point you in the right direction" was used to direct viewers to the choice of two service delivery channels, online or in store, according to their needs. They noted that at that point in the ad an on-screen cursor could be seen moving towards, and subsequently clicking on, the company logo in the corner of the screen, which then switched to displaying the company's website address. They said the ad pointed customers in the direction of the online channel.
Clearcast said their general view was that the costs associated with payday lending meant that it should only be considered as a last resort and not as an everyday form of borrowing, and they did not approve broadcast ads which suggested payday loans were suitable for discretionary spending. They felt that the ad in question, including the reference to "life's little ups and downs", was consistent with their general approach, which was to approve treatments referring to payday loans as suitable for unexpected expenses. They said there was no suggestion in the ad that a payday loan should be undertaken for frivolous or non-essential reasons, but rather that it might be an option for those who needed money to deal with an emergency situation.
2. The Money Shop and the agency disputed whether the cashback offer was such that it required, under the Consumer Credit (Advertisements) Regulations 2010 ("the Regulations"), the inclusion of the RAPR in the ad with greater prominence than the offer. They considered the promotion was a reward for good borrower behaviour in the case that a consumer chose to take out a loan, rather than an incentive to apply for credit. They said, however, that if the promotion was considered to be an incentive to apply for credit they considered that the ad would nevertheless comply with the Regulations and the BCAP Code because the RAPR was more prominent than the trigger for its inclusion (in this case, the incentive). They said the RAPR was shown in a larger font size than the text "£5 Cashback for every £100 borrowed" and appeared for over a second longer. The Money Shop also commented that the RAPR was shown during the most interactive and memorable part of the ad, where the main dog character caught a bone that was thrown towards him and then followed the cursor icon towards the bottom of the screen, where the RAPR was located.
Clearcast said they had received a legal assurance from the Money Shop, through the advertising agency, which stated that the ad complied with the relevant legislation. They had therefore been confident that the APR stated in the ad was sufficiently prominent. They supplied a copy of the legal assurance. That assurance stated that the cashback offer of £5 per £100 borrowed, payable if the customer repaid the loan in full on or before its original due date, had been treated as an incentive to apply for credit and that the ad included a RAPR for that reason. It also stated that the RAPR was more prominent in the ad than the incentive.
The ASA considered that the voice-over statement, "Even with the best training, keeping an eye on our money can be a bit of a tease, and if you're looking at your finances, The Money Shop can point you in the right direction" positioned the advertised service as of benefit to those having difficulty in managing their finances and implied that it was a suitable medium of addressing ongoing financial concerns. We noted the existence of the graphic of the moving on-screen cursor at the point that the voice-over referred to "the right direction", but did not consider that that changed the impression given by the claim that the Money Shop could be a solution to financial worries, whether in-store or online.
We understood that short-term, high-interest loans of the type promoted in the ad were primarily of benefit to those in need of money to cover occasional unexpected shortfalls between paydays, and were not intended as a solution to wider financial problems. Although we were satisfied that the reference later on in the ad to the loans as being suitable for those "experiencing one of life's little ups and downs" accurately reflected the main purpose of the credit product on offer, we considered that that was not sufficient to counteract the impression given elsewhere in the ad that payday loans of the type promoted were a suitable method of addressing wider financial difficulties. We therefore concluded that the ad was irresponsible.
On that point, the ad breached BCAP Code rule 1.2 1.2 Advertisements must be prepared with a sense of responsibility to the audience and to society. (Responsible advertising).
We noted that, under Regulation 6(1)(b), credit ads must specify an RAPR if they included any incentive to apply for credit or to enter into an agreement under which credit was provided, and that that RAPR should be given greater prominence than the incentive (Regulation 6(2)). We acknowledged the Money Shop's and the agency's argument that the offer of £5 cashback for every £100 borrowed, payable when the loan was repaid in full on or before its due date, was not an incentive but rather a reward for good borrower behaviour. However, we considered that it was likely to encourage viewers to consider taking out a loan with that company and was therefore an incentive to apply for credit. We noted that the legal assurance from the Money Shop, upon which Clearcast had relied in approving the ad for broadcast, had treated the cashback offer in that manner.
We further noted that ads stating a rate of interest or an amount relating to the cost of the credit were also required, under Regulation 4(1), to include standard information by means of a representative example. Ads were exempt from this provision only when Regulation 6(1) applied and the only rate of interest or amount relating to the cost of credit was the RAPR itself. We therefore understood that were the cashback offer not to be an incentive to apply for credit requiring (under Regulation 6(1)) the inclusion of the RAPR, and if the ad did not include any other triggers for the RAPR, the ad would have needed to include a representative example.
Because the cashback offer constituted an incentive to apply for credit, the RAPR needed to be communicated with greater prominence than the offer itself. The offer was included towards the end of the ad in both the voice-over ("... when you pay back in full on your original due date, we'll give you £5 cashback for every £100 you borrow") and in bold text in a large yellow circle that appeared on-screen ("£5 Cashback for every £100 borrowed"), whilst the RAPR was stated only in text at the bottom of the screen. Although we noted that the ad should be taken as a whole, we considered that information given in a voice-over would generally be seen by consumers as being more prominent than on-screen text at the bottom of the screen, and that on-screen text at the bottom of the screen was therefore unlikely to be sufficiently prominent if the triggering information was given in the voice-over, or both in the voice-over and on-screen. We also noted that, while the RAPR was written in a larger font size than the cashback offer and was displayed for slightly longer, it was not shown at the point that the cashback offer was introduced, or at any point thereafter, and that the cashback offer was presented in the main part of the screen within a bright yellow circle whilst the RAPR was not. We considered that that had the effect of making the incentive to apply for credit stand out more to viewers than the information it triggered. We therefore concluded that the RAPR was not given greater prominence in the overall presentation of the ad than the cashback offer which triggered the requirement for its inclusion, and that the ad breached the Code.
On that point, 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).
The ad must not appear again in its current form. We told Instant Cash Loans Ltd to ensure that ads did not present payday loans as a way of addressing ongoing financial concerns and that ads which included an incentive to apply for credit also included an RAPR with sufficient prominence.