Background
TTT Moneycorp Ltd is authorised by the Financial Conduct Authority (FCA) for the provision of payment services. As of 22 July 2016, complaints about misleading non-broadcast advertising for such services will be referred to the FCA for their consideration.Ad description
A leaflet for Moneycorp currency exchange, seen at a property show on 15 and 16 May 2015, stated "Currency chart Find out what a property is worth with this currency chart" and featured a table, with the column headings "Amount of Euros" and "Amount in Pounds*," comparing amounts of tens of thousands of Euros with the equivalent value in Sterling. A footnote underneath the chart stated "*indicative market rate of 1.3878 on 11/05/2015". On the bottom half of the leaflet, text stated "Key benefits of using moneycorp Bank-beating exchange rates Low transfer fees".
Issue
Eris FX Ltd, who understood that the currency comparison used the wholesale interbank rate, which they believed was theoretical, exclusive of the advertiser's fees, and therefore unobtainable by consumers, challenged whether the ad was misleading.
Response
TTT Moneycorp Ltd said that the chart was headed "Find out what a property is worth", rather than stating the amount of currency a customer would receive and that this, in combination with the information regarding the existence of transfer fees, gave consumers a clear understanding of the transaction. They said that it was not intended as a statement of the prices that Moneycorp offered, but as an informative tool, and that it told customers to contact them for more information.
Moneycorp stated that the ad had been used at the French Property Show on 15 and 16 May 2015 and was a useful tool for customers interested in purchasing homes in France to understand how many pounds sterling they might need to sell to purchase a property in euros. They said the amount of euros and sterling quoted on the ad was based on an indicative rate that represented the exchange rates available on 11 May 2015. This was made clear to consumers, and included a qualification close to the exchange table. They said the indicative rate in that instance was 1.3878, which was available to their customers on 11 May 2015. They said better exchanges had also been available on 11 May, and that the customer may therefore have received more euros than displayed on the ad for the same amount of sterling. The indicative rate was not theoretical and unobtainable.
Moneycorp stated that the interbank rate was set once a day and was the mid-point rate at which large institutions (such as central banks) could expect to exchange currency. Moneycorp had a live feed from their banking counterparty showing the rate at which this party would sell currencies to Moneycorp, which incorporated an alteration up or down (a 'spread') from the interbank rate. They then altered the rates they offered to clients up or down to generate their own revenue. A transfer fee then may be charged when paying the currency to the customer, depending on the circumstances of the client and the exchange. As such, they did not charge commission for carrying out the exchange, and their clients were offered an exchange rate (which could vary from client to client) before entering into the transaction. The spread applied to individual clients could vary depending on what had been agreed with the customer. As such, there was no definitive exchange rate that they offered to all customers on any given day as it was based on a live, constantly changing feed from their banking counterparty and then often varied from client to client.
Moneycorp stated that on 11 May they had conducted a large number of transactions with private individuals, but that almost all of these transactions would have used different exchange rates. They said they could not provide details of all of these transactions, but provided an anonymised sample of 20, all showing rates between 1.3824 and 1.39, and stated that some customers entered into transactions with better exchange rates.
Moneycorp stated that they did not charge commission on their transactions. Where a transfer fee was charged, they said this would be made clear to a customer as part of the transaction and that transfer fees were specifically referred to in the lower part of the ad. Moneycorp stated that, in any case, on 11 May customers may have received more than the amount of euros for the amounts of sterling displayed on the ad, irrespective of whether their transaction was subject to transfer fees. They gave the example of a customer entering into a GMP to EUR transaction at an exchange rate of 1.3942, which more than covered any potential transfer fees that would have been charged.
Moneycorp said that they had a live feed from a well-known third party which showed their dealing teams the current contributed interbank rate. This was a live exchange rate that was constantly changing according to market conditions. They said that the indicative rate used in the ad was selected from this feed by their team at the time the content was put together. However, they said that the ad was clear that an indicative rate had been used. This rate was clearly displayed on the ad and clients had entered into transactions with Moneycorp at that rate or better on that day.
Assessment
Upheld
The ASA considered that, in the absence of further information to clarify that the comparison was solely a tool to estimate the general value of a property in sterling at recent market rates and was not reflective of rates provided by Moneycorp, consumers would understand the table in the ad as giving information about the likely worth of the value of their sterling currency in euros if exchanged by Moneycorp specifically. We understood that Moneycorp offered different rates to their clients depending on a range of factors and that there was therefore no single rate that they had offered on 11 May. We considered that consumers would understand that exchange rates fluctuated and that available rates may vary according to their circumstances. We therefore considered that the use of an indicative rate, where clearly labelled, was not inherently problematic. However, we also considered that consumers would understand the indicative rate as presented in the ad to be generally representative of the rates received by Moneycorp customers on the date stated and that such a rate should therefore be demonstrably applicable to Moneycorp and derived from transactions that they had undertaken on 11 May (for example, an appropriately-weighted average rate).
We acknowledged Moneycorp's statement that the ad was a tool to give consumers an idea of how much a property would cost in sterling, but considered that consumers would understand it to be based on the rates that Moneycorp could offer their customers on the date stated. We noted that the ad stated “indicative market rate”, but considered that this was insufficient to clarify that the table was only a tool and not generally reflective of Moneycorp’s rates on 11 May. We understood that the rate had not been calculated on the basis of the rates given to customers on 11 May, but had instead been chosen from the fluctuating interbank rate on 11 May, and Moneycorp had not provided further information as to why this specific rate had been selected. We acknowledged that the sample list of Moneycorp transactions had covered rates from 1.3824 to 1.39, including 1.387 and 1.388. We therefore understood that some transactions had therefore been conducted very close to the indicative rate, with some being better and some worse. However, we had not seen evidence to demonstrate that the indicative rate was generally representative of customers on 11 May, and therefore concluded that the ad was misleading.
We also understood that fees applied to some customers, but not all, and that the applicability of fees and their magnitude was dependent on various factors. We understood that the complaint believed the fees should be incorporated into the exchange rates so that the rate shown was representative of the full amount of sterling that would be paid by a customer. However, we understood that because the applicability of the rates varied they could not be calculated in advance and considered that it was therefore not necessary for them to be included in the indicative rate advertised, but that the ad should make clear that it was excluded. The ad stated "low transfer fees", but we considered that this did not make sufficiently clear the variable nature of the fees or to whom they would apply, and that it was therefore not clear that the cost to consumers was not limited to the price of the currency at Moneycorp's exchange rate.
The ad breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
and
3.3
3.3
Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means.
(Misleading advertising),
3.7
3.7
Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation.
(Substantiation) and
3.17
3.17
Price statements must not mislead by omission, undue emphasis or distortion. They must relate to the product featured in the marketing communication.
nd
3.19
3.19
If a tax, duty, fee or charge cannot be calculated in advance, for example, because it depends on the consumer's circumstances, the marketing communication must make clear that it is excluded from the advertised price and state how it is calculated.
(Prices).
Action
The ad must not appear again in its current form. We told TTT Moneycorp Ltd to ensure that in future they held evidence to demonstrate that, where it was not clear that rates given were tools for estimation rather than indications of their own rates, the indicative rates used in their ads were representative of the rates achieved by their customers.
