Adding value to financial compensation ads
09 February 2017
In 2016, we teamed up with the Ministry of Justice’s CMRU to provide claims management companies (CMCs) with up-to-date advertising guidance around the main issues that prompted complaints to the ASA.
We are now following up with CMCs to make them aware of ASA rulings that provide a more detailed assessment of how fees and taxes should be communicated to consumers in financial compensation ads that quote average gross figures.
The ASA considers that, if fees and VAT are deducted from average compensation figures, this needs to be made prominently clear in the ad. Merely setting out this information on a separate webpage is considered not to be sufficient. If taxes, such as income tax, apply to the quoted figure, the ASA considers this to be material information consumers should be aware of to allow them to make an informed decision about the suitability of a company’s services.
In practice, this means that CMCs should ensure that ads that quote compensation figures:
- Make sufficiently clear whether the figures are before or after deduction of fees and VAT
- Don’t state or imply quoted figures are after deduction of fees and VAT if this is not the case
- Communicate clearly if quoted figures will be subject to applicable taxes
Figures that clearly reflect what consumers will receive after deduction of fees and VAT are unlikely to mislead. The applicability of other taxes, however, should still be made clear.
We recommend that CMCs review and amend their advertising where necessary to minimise the risk of being contacted by our Compliance Team, which ensures advertisers observe ASA rulings and the advertising rules.
CMCs that have not received the full guidance, or have questions about its contents, can get in touch with our Compliance team directly. CMCs that are not sure whether their numbers add up can contact our Copy Advice team here.