Who: Advertising Standards Authority, Office of Fair Trading, Trading Standards
When: 21 November 2013
Law stated as at: 11 December 2013
The UK regulator
Advertising in the UK must comply with either the CAP code (for advertisements in physical media) or the BCAP code (for broadcast advertisements). Both of these codes are administered by the UK’s advertising regulator, the Advertising Standards Authority (“ASA”).
The ASA may choose to deal with minor code breaches through an informal process where it will liaise with the advertiser to address any issues. More serious breaches are dealt with by way of a formal adjudication process, where the ASA Council rules on the matter and publishes the results on the ASA website, the principle being one of “naming and shaming” advertisers who are not playing by the rules.
Particularly serious breaches
In cases where this process fails and the advertiser continues with the advertising in question regardless of the ASA’s adverse finding or is the subject of multiple “Complaint upheld” decisions, the Office of Fair Trading (“OFT”) has historically accepted referrals of such cases from the ASA. This referral arrangement was set up on a statutory basis by the Control of Misleading Advertising Regulations 1988 (“CMARs”).
Once the CMARs were superseded by the Consumer Protection from Unfair Trading Regulations 2008 (“CPRs”) referrals of recalcitrant advertisers to the OFT were made under these regulations. The OFT could seek an undertaking that the marketing communication in question was stopped from anyone responsible for commissioning, preparing or disseminating it. If that was not given or honoured, the OFT could apply to the court for an injunction.
To give some context around the types of cases leading to referrals to the OFT, in 2008 budget airline Ryanair was referred to the OFT for 9 breaches of the CAP code over a 2 year period. These included misleading pricing claims, derogatory comments about competitors and an ad that was banned for linking schoolgirls with sexually provocative behaviour. A few years later in 2011 voucher site Groupon was referred to the OFT after the ASA had formally investigated and upheld complaints against the site 11 times and informally resolved 37 cases.
However, the OFT’s tenure as the ASA’s backstop has come to an end. Because of various changes brought about by the Enterprise and Regulatory Reform Act 2013, the OFT is due to be abolished. As such the ASA announced on 21 November 2013 that the new escalation procedure for recidivist advertisers will be referral to Trading Standards. The big switchover is taking place on 1 April 2014 and the ASA has published a note on the transfer including Case Handling Principles.
As Trading Standards is run by local authorities and the ASA is based in the borough of Camden, London it is the Trading Standards team of the London Borough of Camden who will be taking the lead role in enforcing against such breaches in England and Wales. The Department of Enterprise, Trade and Investment in Northern Ireland and the Convention of Scottish Local Authorities (COSLA) in Scotland will be fulfilling the same role in the other parts of the United Kingdom.
In the event that the Camden branch of Trading Standards isn’t best placed to handle the case (i.e. in the case of any ASA case not involving an advertiser based in that London borough!) then the National Trading Standards Board (which consists of representatives of local Trading Standards offices) will escalate the case to the National Tactical Tasking and Coordinating Group (NTTCG) for appropriate delegation. This presumably includes establishing which of the English, Scottish or Northern Irish teams will take the lead in the (quite likely) event that an advert appears in all three areas of the United Kingdom.
On the one hand Trading Standards should be generally geared up for taking on the OFT’s work, as a number of other OFT functions have also been transferred to Trading Standards’ portfolio. In terms of enforcement powers, Trading Standards offices have the power to bring prosecutions for breaches of consumer legislation much like the OFT. The local nature of Trading Standards may also mean that the ASA may feel more able to lower the threshold for referring cases as the new system seems to allow for the additional workload of prosecuting these to be split across Trading Standards offices. The Case Handling Principles also envisage appropriate cases being referred to the new Competition and Markets Authority or other bodies. These may have more resources to chase down and inflict more exacting penalties on breaches which fall within their remit.
On the other hand, it remains to be seen how busy local Trading Standards offices will be able to find time to deal with potentially complex referrals from the ASA and whether such offices will have sufficient technical expertise to effectively navigate and interpret the relevant consumer protection legislation, something at which the OFT was well practised. There are also particular complexities surrounding funding and the risk of referrals becoming subject to freedom of information (“FOI”) requests under the Freedom of Information Act 2000 (“FOIA”), discussed in more detail below:
Funding of escalation
At first glance this appears to contain a number of complexities, partly due to the number of bodies involved. In particular the process for obtaining funding seems particularly convoluted, with costs associated with the referral initially coming out of existing local budgets, and any excess requiring Camden TS to approach the National Tasking Group (NTG) and ask it to direct the National Trading Standards Board (NTSB) to provide additional funding via the Trading Standards Institute. The NTG and the NTSB both seem to have a discretion to refuse to provide any additional funds, which creates two points at which an enforcement could run out of steam due to one or other of the bodies deeming the case unworthy of funding.
Freedom of information / Environmental information
Another potential wrinkle is the possibility that certain information about escalated cases may become subject to FOI requests and/or requests for environmental information under the Environmental Information Regulations 2004 (the “EIRs”). The EIRs entitle members of the public to make information requests of public bodies for “environmental information”. The ASA appears to have mentioned these regulations in its Case Handling Principles as the EIRs could potentially be used as an alternative to a FOI request if, for example, a case on green claims was being escalated.
Camden’s local authority is a public body and therefore vulnerable to requests under FOI and the EIRs. However the ASA’s note predicts that most of the information provided will fall under one or more of the categories of information which are excluded from these and can be withheld. However, unlike FOIA the EIRs contain an additional “public interest test” which, if satisfied, can overrule the reasons why local authorities can withhold information, although it seems that this would only be a way in for interested parties in certain very limited circumstances.
The susceptibility of escalated cases to such enquiries is not new, as the OFT is also a public body. What may be of more concern is that requests under FOIA or the EIRs must be considered on a case by case basis, by Camden’s local authority or the local authority dealing with the case. As referrals have tended to be relatively high profile, this raises the spectre of local authorities having to deal with a deluge of FOI and EIR requests from the press should a case be of particular interest, with all the associated drain on resource.
Why this matters:
It remains to be seen whether Trading Standards will be an effective backstop for the ASA, or whether removing the OFT from the equation will make enforcement against persistently offending advertisers a greater challenge for the regulator. However it is worth remembering that although historically referrals to the OFT have been very much the exception, escalation will still have the potential to drag advertisers into the expense of the court system and that the regulator may be able to mobilise big-hitting bodies such as the Competition and Markets Authority in certain cases. Given the track record of referrals it seems unlikely that Trading Standards will be swamped with ASA cases and the NCTTG may be able to effectively allocate resource when something major does crop up.
Marketinglaw will be keeping an eye out for the first advertiser to be referred up under the new system and how this referral fares.
The ASA’s note on the new arrangement can be found at here.