Summary of Council decision:
Two issues were investigated, both of which were Upheld.
A direct mailing from pension enrolment company Smart Pension Ltd, received on 25 January 2017, which stated on the envelope, above the letter box, "www.AutoEnrolment.co.uk. New rules apply to all UK employers" and beneath the letterbox "New regulations - important communication from Smart Pension Ltd" along with a logo for Smart Pension and "automatic enrolment".
The first page of the letter began with a heading which stated, "Failing to set up your workplace pension now could soon blow a serious hole in company finances". Text in the body of the letter stated, "Any company with employees must now set up a workplace pension, by law. The law is ready to penalise any company that doesn't comply and the financial penalties can be extremely severe" and "You will be liable for a fine if you don't comply - act now". The letter also contained logos for "HM Government" and "Business is Great Britain". The letter was signed by Smart Pension Chief Executive, Andrew Evans. Beneath Mr Evans' signature was text which stated, "PS: Remember you must be compliant by your deadline or you enter the escalating penalty period. Turn over and register - it's fast, easy and free!".
The second page of the letter included a heading which stated "3 Steps to get compliant today. Go to: www.AutoEnrolment.co.uk". Underneath was a three-step guide on how to sign up to Smart Pension's enrolment scheme followed by text that said, "Submit your declaration of compliance. That's it. Congratulations!" with a telephone number beneath.
Smart Pension also included an A5 leaflet with the envelope and letter, which had not been submitted by the complainants. The first page of the leaflet included the Smart Pension logo in the top left-hand corner followed by large text that said, "Workplace Pensions. Hurry! Time is running out. Here's how to avoid penalties".
The second page of the leaflet stated, "Here's how to avoid penalties" and that Smart Pension was the "UK's fastest one stop solution for auto enrolment. FREE for businesses". One subheading stated, "How can I be sure that Smart Pension is right for my business?". Smart Pension said that this subheading explicitly described that other pension providers were available.
The bottom of the leaflet included text which said, "Sign up and you can be compliant in minutes" with a warning beneath that which said, "The Pensions Regulator can and will initiate formal legal proceedings to recover penalties that you may be issued with. Fines vary from an initial penalty of £400, plus daily fines from £50 up to £10,000 - you can lose thousands in a couple of weeks. Breaching employer duties means you could also face criminal prosecution".
A panel along the right-hand side of the leaflet included a quote from Smart Pension Chief Executive Andrew Evans where he referred to "satisfied clients" and that "Smart Pension was built with business owners in mind". The panel also included a testimonial from David Brackin MD of StuffUSell.co.uk and below that a link to Smart Pension's website. Along the bottom of the page was Smart Pension's logo, the automatic enrolment logo, a Defaqto score, an MAF accreditation and the full name of the business "Smart Pension Ltd".
The complainants challenged whether the ad:
1. was obviously identifiable as a marketing communication; and
2. implied it was an official communication and that all companies needed to visit the website or call the number shown to ensure compliance when that was not the case, and was therefore misleading.
1.& 2. Smart Pension Ltd said the envelope was an out-of-date version that should not have been in circulation at the time the complaint was made.
Smart Pension believed including their full corporate name on the front of the envelope made it clear the ad was a marketing communication. They said the reason they used a brown envelope, also used by some government organisations, was to reduce costs. They said the prominence of their website’s URL on the front of the letter as well as their company logo emphasised that further.
They said that the tone and structure of the letter made it eminently clear to the reader that it was a marketing communication offering a commercial service, and not an official Government communication.
Smart Pension said the statements in the letter “Failing to set up your workplace pension now could soon blow a serious hole in company finances” and “Any company employees must now set up a workplace pension, by law. The law is ready to penalise any company that doesn’t comply and the financial penalties can be extremely severe” were factually correct and that fines imposed by the regulator were significant.
They said it was not misleading to say that “You will be liable for a fine if you don’t comply - act now” because the Pension Regulator could fine the addressee of the ad if they did not comply with the law. They provided evidence to show that the Pension Regulator had already fined a number of companies for non-compliance.
Smart Pension said the other claims in the letter were factually correct and that other statements such “Go to: www.AutoEnrolment.co.uk” would have been recognisable by the consumer as a call-to-action, common in marketing communications.
They said the Business is Great Britain and HM Government logos were accurate in their use and referred to government initiatives in which Smart Pension had been a partner.
Smart Pension said that their identity was clearly stated multiple times and that official government organisations did not use the same language as they did.
Smart Pension maintained that the ad did not imply that readers were obliged to use Smart Pension’s services in order to comply with the law and that the letter was exclusively targeted at business owners, who would be familiar with marketing communications.
Smart Pension said the leaflet was prominently branded with their logo and was structured in a way that made it obvious that it and the remaining contents of the envelope were a marketing communication.
Smart Pension did, however, offer to make changes to its marketing including wording and layout.
The ASA welcomed Smart Pension's willingness to make changes to the ad.
The CAP Code stated that marketing communications must be obviously identifiable as such. We considered that in order to avoid misleading it should be immediately clear to readers if an envelope contained an ad, before opening it. The ASA considered readers should be able to tell from the envelope itself that it was a marketing communication.
We acknowledged the envelope included the advertiser's logo, web address and company name. However, while the envelope was sent from a private company the word "Ltd" seemed to be the only information that implied the envelope was a marketing communication. While Smart Pension was a private company, we considered most readers would not recognise the brand immediately, so the inclusion of its name and logo would not help to distinguish the envelope as a marketing communication. We also noted that the format of the envelope itself – brown windowed – was commonly used by public and non-marketing organisations including the Pensions Regulator.
In addition, we considered the reference to 'Automatic enrolment', the legal initiative to help employees set up a workplace pension, and the reference to "new regulations" added to the suggestion the envelope was not a marketing communication.
For the reasons given, we concluded that the ad was not obviously identifiable as a marketing communication.
On that point the ad breached CAP Code (Edition 12) rules 2.1 2.1 Marketing communications must be obviously identifiable as such. (Recognition of marketing communications) and 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising).
As set out in point 1, we considered the envelope was not obviously identifiable as a marketing communication. We considered it suggested the contents contained essential information that the reader needed to respond to and a call-to-action more closely associated with an official communication.
We considered the advertiser's web address www.AutoEnrolment.co.uk, the logo for Automatic Enrolment and the format of the envelope, which was very similar to that used by the Pensions Regulator, reinforced the impression the envelope was an official communication.
The first two paragraphs of the letter referred only to the penalties incurred towards employers who had not brought their workplace pension scheme up-to-date. Wording such as "all companies must set up a qualifying pension on time", "Ultimately failure to comply can result in you losing thousands in a couple of weeks and even result in a prison sentence of up to two years" and "you need to act NOW", suggested the letter required an immediate response from the reader.
The first page of the letter did not clarify Smart Pension was a private company either beyond the word "Limited", which was included in a footnote at the bottom of the letter, similar to the envelope. We noted the HM Government logo in the bottom right corner of the letter, which we considered reinforced the implication it was an official communication.
We acknowledged the reverse of the letter had more in common with a commercial mailing, including its use of pictures and graphics, which were less formal in tone. However, it did include further warnings "SAFEGUARD YOURSELF - CALL NOW" and calls-to-action "3 STEPS TO GET COMPLIANT TODAY". It also used logos including "HM Government" and "Auto-Enrolment" which suggested the ad was an official communication that required the immediate and necessary attention of its reader.
Although on the reverse of the letter, at the bottom of the page, there was a description of who Smart Pension were, that did not clearly state what they did further than support businesses "with the challenges of auto enrolment".
The leaflet, contained elements which we considered were in keeping with both an official and non-official communication. The front page of the leaflet, both in its style, format and the call to action had more in common with an official communication. Again, the name of the company's website, www.AutoEnrolment.co.uk, used the same wording as the legal initiative to help employees set up a workplace pension.
However, the second page of the leaflet, which included a quote from the company's Chief Executive, a reference to the business as "Smart Pension Ltd", a reference to clients, a testimonial from another business and a Defaqto score, had far more in common with a commercial mailing. Nonetheless there were still elements on that page that were more in keeping with an official communication such as the compliance warnings and the use of the automatic enrolment logo. There was also a lack of an explicit reference to Smart Pension as a business, referring only to itself as "the UK's fastest one-stop solution for auto enrolment". We considered the enticement that their service was "FREE for businesses" strengthened the implication that it was an official communication.
We considered that in the context of the ad as a whole, the leaflet did not make it sufficiently clear that Smart Pension was a commercial organisation. We also considered that the envelope, the letter and the leaflet contained no prominent disclaimers that provided sufficient additional information to allow consumers to understand the non-official nature of the service on offer.
For those reasons we considered the mailing as a whole implied that companies needed to visit the website or call the number shown to ensure compliance when that was not the case, and therefore concluded it was misleading.
On that point the ad breached CAP Code (Edition 12) rules 2.3 2.3 Marketing communications must not falsely claim or imply that the marketer is acting as a consumer or for purposes outside its trade, business, craft or profession; marketing communications must make clear their commercial intent, if that is not obvious from the context. (Recognition of marketing communications), and 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising).
We told Smart Pension Ltd to ensure their future marketing communications were obviously identifiable as such and did not suggest, for example, by using language or presentations associated with government or other official bodies, that they were official communications. We also told them not to misleadingly suggest readers needed to contact them to ensure compliance.