BackgroundWorld First UK 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.
Claims on the home page of www.worldfirst.com, a foreign currency transfer provider, stated "Welcome to a better way to transfer money abroad. Skip the bank fees and bag our best currency deals ...". The page included a currency converter for internet users to enter an amount, which would then be converted to an amount of the chosen currency. Text stated "You could save [amount] versus your bank*. Interbank [rate amount] The rate that banks buy and sell currency to each other Call us now for your rate ...". The asterisk linked to text stating "*The estimated saving is based on data from four of the UK's largest high street banks provided on the 05/08/14. The saving is calculated on the difference between World First's margin for UK based clients and the average of the banks' margins based on transfers of 2,000GBP, 20,000GBP, 50,000GBP and 250,000GBP to EUR and USD".
Eris FX Ltd, who understood that the displayed exchange rate could not be achieved by individual consumers, challenged whether the ad was misleading.
World First UK Ltd said the currency converter displayed a customer dealing rate for amounts up to £30,000 and for amounts over that figure the converter displayed the interbank rate. They included the interbank rate on their converter because they believed market data was useful and relevant to their customers. They explained their clients were both private individuals and corporate, and the rates offered differed by type of client, product type and transaction amount. They said the most common numbers entered into the converter were 1000, 1 and 100, which they believed indicated that their clients were looking at where the market was trading rather than at their own rate. They said they were specialists in foreign currency and international payments and believed their target audience would understand the description of the interbank rate.
World First said they had shown a customer dealing rate in the past, but because it was not applicable to all client groups, it had caused confusion amongst their clients. By providing only the interbank rate allowed all clients to understand the market rate and compare it to their own rate, which was provided when they logged on to World First’s online platform or called them directly. Clients also needed to be aware of interbank rates to fund margin calls, which was an amount that might be required to cover possible losses for forward contracts and options products due to exchange rate fluctuations.
World First acknowledged that using the interbank rate might cause some confusion and took steps to amend the presentation of the currency converter. They removed the text “You could save GBP [amount] versus your bank” and moved the converted amount to the left-hand side for prominence and the interbank rate to the right-hand side. The interbank rate was linked by an asterisk to text immediately below stating, “The interbank rate is the rate that banks buy and sell currency to each other. It shows you the market rate of your chosen currency pair for information purposes and is not our offered rate or an indication of price. Call us now for your great rate ... For a personal transfer you could save [amount] vs your bank ...”. They believed the changes made clear that the rate displayed was not achievable by individual consumers, but still provided their customers with relevant information.
The ASA understood that the foreign exchange market was a fast moving industry with fluctuating exchange rates and a currency converter was a tool to provide consumers with a conversion of one currency to another, based on real-time information on the current market exchange rates. Although the frequency at which currency convertors updated the exchange rate was likely to vary, we considered that consumers would nonetheless expect the information provided to be as up to date as possible and that the converted amount, rate and any savings claim displayed would apply to them.
We noted the World First currency converter calculated the currency amount using the interbank rate, which was a rate that banks charged each other when trading foreign currency; it was not a rate available to consumers or the rate that World First was offering their customers. We acknowledged that knowing the interbank rate might be useful information for some types of transactions, but nonetheless noted that clients would still not be offered the interbank exchange rate.
We welcomed World First’s willingness to amend the currency converter page to explain the interbank rate in more detail, but we nonetheless considered that the changes they made had not resolved the problem. Although the amended text explained that the displayed interbank rate and the currency amount would not be offered, we considered that the qualification contradicted rather than clarified consumer expectations that a currency converter would display the exchange rate that they might expect from using World First. The web page told clients to ring for their rate, but we considered that it did not negate the impression that the amount and rate shown was achievable, which it was not.
We noted the interbank rate market data was relevant to some clients and needed to be included on the website in some form. However, we considered that the ad went beyond simply providing market data information. Using the interbank rate in the context of a savings claim and a tool to convert amounts of currency gave the impression that the rate and amount displayed would be the rate that World First was offering to their customers, which was not the case.
We considered that, because the converted currency amount displayed was not based on a dealing rate that consumers, whether private or corporate, would be able to achieve, the currency converter calculation claims were likely to mislead. Because the ad was promoting an unachievable rate, we concluded that the advertising breached the Code.
The advertising breached CAP Code (Edition 12) rules
Marketing communications must not materially mislead or be likely to do so.
Marketing communications must state significant limitations and qualifications. Qualifications may clarify but must not contradict the claims that they qualify.
Qualifications must be presented clearly.
CAP has published a Help Note on Claims that Require Qualification. (Qualification), 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. (Prices) and 14.1 14.1 Offers of financial products must be set out in a way that allows them to be understood easily by the audience being addressed. Marketers must ensure that they do not take advantage of consumers' inexperience or credulity. (Financial products).
We told World First UK Ltd not to use a currency converter in the context of claims about the rates that consumers could get from them, if the converter used rates and displayed amounts that were not achievable by consumers.