The TV ad small print said the rate was linked to Bank of England base rate and variable, but the voiceover and other onscreen text suggested otherwise. How did the ASA view this apparent long term promise and might it have had more far-reaching implications?
A & L'll fix the rate?
Topic: Financial services
Who: Advertising Standards Authority
Where: London
When: June 2006
What happened:
A TV ad for Alliance and Leicester mortgages was held to be misleading by the ASA.
The voice over and large on-screen text stated that the mortgage rate stayed at the fixed rate of 5.04% for the first two years "and then stays low at 5.49% for the remainder of your mortgage. Large on screen text said ""5.04% for 2 years, then 5.49% for rest of term." However, only the scrolling text at the bottom of the screen reflected the full story: "Initially bank of England base rate +0.54% currently 5.04% variable. The Bank of England base rate +0.99% currently 5.49% variable."
When asked by the Advertising Standards Authority ("ASA") for their comments on the complaint received from a viewer, Alliance and Leicester responded that the ad clearly stated that the rate was variable, linked to the Bank of England base rate. Therefore, viewers would not wrongly believe that the fixed rate applied for the entire term.
The ASA disagreed. The information in the scrolling text, which explained that the rate was variable, was a significant part of the offer. Yet, the voice-over and the larger on-screen text directly contradicted this by claiming that the rate would remain at 5.49%. On-screen text can be used to provide clarification or additional detail but it cannot be used to directly contradict the more noticeable claim.
Why this matters:
During the pre broadcast vetting process the Broadcast Advertising Clearance Centre (BACC) had received assurances from the advertiser that the ad complied with the Financial Services Authority (FSA) Mortgage Conduct of Business rules. Given the quite categorical assertion in the ad in voiceover and static text that the quoted rate applied "for the remainder of the mortgage" (MCOB Rules), this is perhaps surprising.
Contractual issue
Additionally, financial services advertisers should be aware of the wider implications of misleading statements in their ads and literature, for instance the possibility of a contractual claim.
Back in 1997, Norwich and Peterborough Building Society's brochure claimed that its TESSA interest rates were "very competitive" throughout the investment term. It was subsequently taken to court by an investor, however, on the basis that, in reality, after an initial competitive rate period, the interest rate sagged to a point where it rated very poorly amongst its competitors.
The court was unimpressed with Norwich and Peterborough's claims that the words "very competitive" were "mere puff". Instead, the words were considered to be a term of the contract entered into by the claimant after reading the brochure and the court awarded the difference between the interest the claimant customer actually earned and the average interest paid across the industry. Ouch!
Veena Srinivasan
Solicitor
Osborne Clarke London
Veena.srinivasan@osborneclarke.com
