Summary of Council decision:
Three issues were investigated, of which two were Not upheld and one was Upheld.
A TV ad for Vanquis Bank Ltd, seen on 7 March 2016, featured a voice-over that stated, “Have you heard about Vanquis? The credit card that’s accepted over 3 million people. It could help you build your credit rating, which is very useful. It’s very handy because it could increase your credit limit. Up to as much as £3500 over time, which is very helpful. To start building your credit rating apply for a Vanquis credit card today at vanquis.co.uk.” Throughout the ad was small print at the bottom of the screen that stated “Representative 39.9% APR (variable). 3M at Dec 2015. Use your card sensibly, stay within your limit and make your monthly payments on time. Not doing so could harm your credit rating and make getting credit more difficult” and “Representative 39.9% APR (variable). Credit available subject to status. UK residents 18+. Terms and Conditions apply. Vanquis Bank Ltd”.
The ASA received one complaint from a member of the public. The complainant challenged whether:
1. the claims “It could help you build your credit rating, which is very useful” and “It’s very handy because it could increase your credit limit” were misleading;
2. the ad irresponsibly targeted people with low credit ratings who were likely to be managing debt already; and
3. the APR was made sufficiently clear in the ad.
1. Vanquis Bank Ltd believed that the claim “It could help you build your credit rating, which is very useful” satisfied the Financial Conduct Authority’s (FCA) Consumer Credit Sourcebook (CONC) regarding promotions and communications with customers. They stated that under Chapter 3 of CONC, rule 3.3.1 (1A) stated “A firm must ensure that each communication and each financial promotion: …(c) is balanced and, in particular, does not emphasise any potential benefits of a product or service without also giving a fair and prominent indication of any relevant risks; … (e) does not disguise, omit, diminish or obscure important information, statements or warnings”.
Vanquis Bank stated that the claim was qualified with the on-screen text “Use your card sensibly, stay within your limit and make your monthly payments on time. Not doing so could harm your credit rating and make getting credit more difficult”. Furthermore, they stated that the text was presented before, during and after the claim was made.
Vanquis Bank provided credit cards to people who were likely to have no credit history or a ‘thin’ or ‘bad’ credit file with credit reference agencies. Their aim was to help people who were new to credit, or give people who had been turned down for credit elsewhere, the opportunity to build their credit rating through the Vanquis credit card.
Vanquis Bank stated that on a monthly basis, they provided details of the performance of customers’ accounts to the three principal UK credit reference agencies, which could be accessed by other companies to make decisions about credit and credit-related services for customers. Vanquis Bank stated that when customers used their Vanquis credit card sensibly, stayed within their credit limit, and paid their monthly minimum payment on time, the information they provided to the credit reference agencies built that customer’s credit rating. Vanquis Bank acknowledged that whilst there were no guarantees, if customers followed these steps consistently every month, it would improve their credit history and build a better credit rating. Failing to follow such steps would consequently harm their credit rating and ability to obtain more credit, which Vanquis Bank stated was explained in the on-screen text.
Vanquis Bank stated that the claim “It’s very handy because it could increase your credit limit” was also qualified by the same on-screen text and complied with rule 3.3.1 (1A) of the FCA’s CONC. Vanquis Bank sought to provide customers with a credit limit that reflected their needs and ability to manage their account. When opening an account, credit limits started at £150 and would be no more than £1,000, depending on the customer’s credit history, financial circumstances and how they managed their current credit facilities with other lenders. This information was obtained from the three principal UK credit reference agencies.
Vanquis Bank assessed customers’ eligibility for a credit increase every month. Customers would only become eligible after their fourth statement, which was typically four months after opening their account. They stated that when customers used their card sensibly, stayed within their credit limit, paid their monthly minimum payment on time, kept their other accounts such as credit cards, loans, mobile phone and mortgages in order and did not take on too much debt elsewhere, they would generally become eligible for a credit limit increase on their Vanquis credit card. A customer would then be given 30 days’ notice of a credit limit increase and once accepted they would next become eligible for a further increase four months after the first increase. This could go up to £3,500.
Vanquis Bank stated that they undertook qualitative and quantitative consumer research programmes, which supported the claims that their consumers considered that building on their credit rating and getting an increase in their credit limit to be helpful.
2. Vanquis Bank stated that their credit card customers were different from those of mass market card issuers, as they had no, very little or an impaired credit record history, and that the majority of their new customers did not previously have a credit card.
Vanquis Bank stated that they issued credit cards to “non-standard” customers cautiously, responsibly and sustainably, in line with their regulatory obligations. They aimed to educate and support their customers, whether they were new to credit or wanted to improve their financial history. Customers started with credit limits as low as £250–£500, which was monitored over time to understand individual customer behaviour before increasing their credit limit when it was appropriate to do so.
Vanquis Bank believed that the ad in this respect also complied with rule 3.3.1 (1A) of CONC as the on-screen text warned viewers of the financial risks associated with a credit card. Furthermore, they stated that their credit granting process was subject to a creditworthiness assessment as required by rule 5.2.1 and 5.2.2 of CONC.
3. Vanquis Bank stated that rule 3.5.7 (1) of CONC required a financial promotion to include a representative APR if it stated or implied that credit was available to individuals who considered that their access to credit was restricted and that the representative APR was to be given no less prominence than any of the information regarding the credit being made available. Vanquis Bank believed that they had complied with this rule as the on-screen text stated “Representative 39.9% APR (variable)” and was continuously visible throughout the ad. Furthermore, they stated that the definition and size of the text complied with Clearcast’s guidelines and satisfied the provisions in CONC as well as the BCAP Code.
Clearcast stated that they considered the claims were carefully worded and were unlikely to be interpreted as being absolute in nature, as they included the words “help” and “could”. They stated that an increased credit rating and limit were not guaranteed, but achievable when following standard credit best-practice, which they believed was made sufficiently clear in the ad with the on-screen text “Use your card sensibly, stay within your limit and make your monthly payments on time”.
Clearcast stated that the ad was not targeting people already encumbered with existing debt. They acknowledged that the ad referred to building credit, but they believed that this did not necessarily mean that a person’s credit rating was low solely because of unpaid debts.
Clearcast stated that they were satisfied with the presentation of the APR in the ad.
1. Not upheld
The ASA acknowledged that Vanquis Bank believed that provided consumers used their credit cards sensibly, stayed within their limit and paid their monthly minimum payment on time, could improve their credit rating and limit.
We considered that viewers would understand the claims “It could help you build your credit rating” and “It’s very handy because it could increase your credit limit” to mean that provided they used their credit card responsibly and paid their bills on time, it could help improve their credit score and limit. We considered that this was clarified in the on-screen text, which stated, “Use your card sensibly, stay within your limit and make your monthly payments on time. Not doing so could harm your credit rating and make getting credit more difficult”. Furthermore, we noted that the on-screen text continuously appeared from the beginning of the ad until shortly after the claims were made.
We therefore concluded that the claims “It could help you build your credit rating, which is very useful” and “It’s very handy because it could increase your credit limit” were unlikely to mislead consumers.
On this point we investigated the ad under BCAP Code rules 3.1 3.1 Advertisements must not materially mislead or be likely to do so. (Misleading advertising) and 3.12 3.12 Advertisements must not mislead by exaggerating the capability or performance of a product or service. (Exaggeration), but did not find it in breach.
2. Not upheld
We understood that the Vanquis credit card was targeted at consumers who had little or weak credit history and according to Vanquis Bank was issued to customers cautiously and responsibly, in line with regulatory obligations.
We noted that the voice-over stated, “It could help you build your credit rating, which is very useful” and “To start building your credit rating apply for a Vanquis credit card today”. We considered that these claims suggested that the ad was targeted at people who wanted either to obtain or improve their credit score. We acknowledged that although a person might have a low credit score because of outstanding debts, there were, however, other possible causes. This included making regular late payments and a person having no borrowing history, which we understood would make it difficult for a lender to assess how much of a risk they would be. Furthermore, we noted that the ad did not encourage people to use their credit card for frivolous spending.
Therefore, we concluded that the ad did not irresponsibly target people with low credit ratings who were likely to be managing debt already.
On this point we investigated the ad under BCAP Code rule 1.2 1.2 Advertisements must be prepared with a sense of responsibility to the audience and to society. (Social responsibility), but did not find it in breach.
The ASA understood that rule 3.5.7 (1)(a) of CONC required a financial promotion to include the representative APR if it “states or implies that credit is available to individuals who might otherwise consider their access to credit restricted”. Furthermore, rule 3.5.7 (2) stated that “The representative APR must be given no less prominence than any of the matters in (1)”.
We noted that although the representative APR in the on-screen text was legible and was continuously shown at the bottom of the ad during the entire broadcast, it was not, however, disclosed in the voice-over. We considered that the voice-over gave greater emphasis on how consumers could benefit from the Vanquis credit card, having stated, “It could help you build your credit rating, which is very useful. It’s very handy because it could increase your credit limit” and “To start building your credit rating apply for a Vanquis credit card today”. Furthermore, the voice-over’s references to how “useful”, “handy” and “helpful” the credit card could be, were also spelt out using visual effects and were shown in a larger font in the centre of the screen.
We therefore considered that the APR was not made sufficiently prominent and concluded that the ad breached the Code.
On this point the ad breached BCAP Code rules
Advertisements must not materially mislead or be likely to do so.
Qualifications must be presented clearly.
BCAP has published Guidance on Superimposed Text to help television broadcasters ensure compliance with rule 3.1 3.1 Advertisements must not materially mislead or be likely to do so. . The guidance is available at:
http://www.cap.org.uk/~/media/Files/CAP/Help%20notes%20new/BCAP_Advertising_Guidance_Notes_1.ashx (Qualification) and 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. (Financial products, services and investments).
The ad must not appear again in its current form. We told Vanquis Bank Ltd to ensure that the APR was made sufficiently prominent in their future advertising.