ASA Adjudications

Loans.co.uk Ltd
6 Marlin House
Croxley Business Park
Watford
Herts
WD18 8TD
Number of complaints: 1
Date:14 May 2008
Media:Television
Sector:Financial

Ad
A TV ad for Loans.co.uk showed a man coming home from work and then in various domestic situations including helping his child with her homework, playing a computer game with another child and playing football in the garden. The images used were a mix of real life and computer imagery.  The voice-over stated "When you get home from work, there's more to life than sorting out your finances.  Why not simply consolidate your existing credit into one affordable payment so you can focus on the things that really matter.  Call Loans.co.uk ..."  On-screen text, which appeared at the same time as the voice-over, stated "Rates from 8.1%APR variable to 19.9%APR variable.  Typical 13.4%APR variable." The voiceover continued "... We could reduce your outgoings by hundreds of pounds per month and you can have a five month break before you start making repayments." On-screen text, which again appeared at the same time as the voice-over, stated "Interest charged from opening of account."   The voice-over finished with "So if you're a homeowner and need a loan call Loans.co.uk ...". On-screen text at the end of the ad stated "Loans secured on residential property and subject to status ...".
Issue
1.  The complainant, who believed the ad would appeal to those already in debt, challenged whether it misleadingly trivialised the nature of the service offered.

The ASA challenged whether the ad:

2.  was misleading, because it omitted to reference the extended loan period required to enable the level of reduced repayments advertised; and

3.  complied with the Consumer Credit (Advertisements) Regulations (CCRs).

BCAP TV Advertising Code: 5.1;9.8;5.2.3

Response
1.  Loans.co.uk said the ad, in their view, did not trivialise the nature of the service.  They explained that their ads were designed to portray their loan process, and their service generally, as fast, friendly and straightforward.  They believed the portrayal in the ad was a fair reflection of their service and how it was distinguished from some of their competitors.  

They acknowledged that it was likely that consumers who might be interested in the ad could already have debts; they pointed out that most adults in the UK had existing credit arrangements, which included mortgage, credit cards, unsecured loans and store cards.  They said they were not, however, targeting those who were in arrears with their credit arrangements as they believed IVA or debt management companies might.  They said the emphasis of the ad was aimed at customers who may have debt, but could afford to consolidate their existing repayments into one secured loan.  They explained that it would not be effective for them to target credit-needy consumers, because they were unlikely to be able to help consumers with poor credit profiles.  

Loans.co.uk said the ad used the profile of a typical family and gave a clear rationale about why people might want to consider consolidation, for example, reduced monthly outgoings or a five-month payment holiday.  They said they never intended to mislead consumers or trivialise the purpose of consolidating any debts, and asserted that they took their regulatory obligations, which included an obligation under the regulations of the Financial Services Authority (FSA) to treat all customers fairly, very seriously.  They believed they were careful to ensure that they were clear, fair and not misleading about all of their products and services.

Clearcast said they believed the ad would appeal to those with existing debts, because the product it featured was a consolidation loan; it would only be of interest, therefore, to those who already owed money.  They pointed out, however, that it was not the type of ad that referred to people struggling with debt, but conveyed a simple message that a number of monthly payments could be consolidated into one.

They said the ad, in their opinion, did not misleadingly trivialise the nature of the service.  They pointed out that it did not use live action footage to portray a "real" scenario, but used a surreal half live action, half animated technique to show a normal family leading a normal life.  They said it made no visual reference to finance at all: the family were not shown to be interacting with the loan company or taking a loan without proper thought and consideration, which was a serious decision that should be treated with respect.  They believed, overall, the ad implied people had busy lives and, if it was the right decision for any individual, it was possible to take out a loan to consolidate existing borrowings, using a simple and straightforward service.    

2. & 3.  Loans.co.uk believed the ad did not give a false impression, conceal or omit information in order to mislead.  They pointed out that it used conditional language, "...we could reduce your outgoings ...", to specifically avoid misleading consumers.  

They said that all the important limitations and qualifications of the service were clear and prominent; being that it was only available to homeowners, the amount borrowed was always secured on the customer's home and a successful application was always subject to status.  They believed no key information was missing and pointed out that those limitations were only factors in determining whether potential customers qualified for the service.  

Loans.co.uk believed the fact that the ad did not refer to an extended loan term did not make it misleading.  They explained that, as brokers, they did not know what a prospective customer's loan term would be, but pointed out that the term would not be extended in all cases.  In addition, in their view, the ad did not include the type of information that triggered a requirement under the CCRs to display a loan term, for example, the amount of reduced loan repayments.  They believed the ad conformed with all aspects of the CCRs and said they had a structure in place to assist with compliance in that respect.  They understood that there were no "Schedule 2" triggers in the ad and no "Schedule 2" information was given.   

Clearcast endorsed Loans.co.uk's view.


Assessment
1.  Upheld
The ASA noted the comments of Loans.co.uk and Clearcast and acknowledged their argument that the ad did not seek to mislead about the nature of the service offered.  

We understood that loan consolidation, particularly when a home was required as security, was a serious step, which should be taken only following careful consideration.  We considered, however, that the light-hearted tone of the ad, which included catchy background music, colourful computerised imagery and a casually-spoken voice-over, gave the general impression that the service offered was a trivial one which could be considered in a light-hearted manner.  

We considered the voice-over, which stated "Why not simply consolidate your existing credit ... so you can focus on the things that really matter", could be taken to mean that the solution to debt management was a simple one rather than the intended message that the process and service provided by Loans.co.uk was straightforward.

We disagreed that the ad was not addressed to those struggling with debt.  It included the statements "We could reduce your outgoings by hundreds of pounds per month" and "consolidate your existing credit into one affordable payment" which we considered implied an offer to those experiencing difficulties in meeting their payments.

Although we appreciated the likely fact that Loans.co.uk would be unable to help anyone with a poor credit rating and so to target those consumers through marketing would be ineffective, we considered that the ad did trivialise the nature of the service offered and gave a misleading impression to those who were likely to qualify for it.  

On this point, the ad breached CAP (Broadcast) TV Advertising Standards Code rule 5.1 (Misleading advertising).

2. & 3.  Upheld
We acknowledged that Loans.co.uk were not able to predict in an ad the exact loan period involved in each individual circumstance. We noted, however, information in the voice-over stated "We could reduce your outgoings by hundreds of pounds per month" and considered that that implied an arrangement could be made for consumers to save a significant amount per month compared to the amount they currently paid over the same period.  

We consulted the Office of Fair Trading (OFT) for a view.  The OFT were concerned that text in the voice-over, "... you can have a five-month break before you start making repayments", was a statement of an amount of repayments of credit under Schedule 2, paragraph 5 of the CCRs and, therefore, triggered the necessity for all other Schedule 2 information to be supplied: the amount of credit, any deposit, a cash price, advance payment, frequency, number and amount of repayments of credit as required by Regulation 4(1).

They said the claim "We could reduce your outgoings by hundreds of pounds per month" was an incentive to take credit in their view and so triggered the need to state a typical APR as required by Regulation 8(1)(d).  They added that the typical APR needed to be presented together with the other Schedule 2 information in order to comply with Regulation 8(5)(b) and needed to be given greater prominence than the other rates of charge.  

We noted the OFT's comments.  We acknowledged that the typical APR was included and was given more prominence than the other rates mentioned.  We considered, however, that, in order to comply with Regulation 8(5)(b), which stated that the typical APR should be "presented together with any of the items listed in Schedule 2 that are included in the advertisement", the APR should have been given at the same time as the claim "... you can have a five-month break before you start making repayments" rather than before it.  We also considered that the ad should have included an indication of the frequency, number and amount of repayments of credit in order to comply with the CCRs and that this information should have been presented at the same time as the typical APR.

On points 2 and 3, the ad breached CAP (Broadcast) TV Advertising Standards Code rules 5.1 (Misleading advertising), 5.2.3 (Qualifications) and 9.8 (Finance and investment - Lending and credit).
Action
The ad should not be broadcast again in its current form.

Adjudication of the ASA Council (Broadcast)

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