“With a Pounds to Pocket 12 month personal loan you can get up to £2000 sent to your bank account in 10 minutes. Apply online 24/7″ said the voiceover. Small print then mentioned the tidy 278% RAPR,
but was this prominent enough? Aisling Pringleton reports.
Topic: Financial services
Who: Advertising Standards Authority
When: 23 January 2013
Law stated as at: 31 January 2013
On 23 January 2013 the ASA published an adjudication upholding complaints relating to a television advert for Pounds to Pocket, the trading name of CashEuroNet UK LLC.
The main issue for complaint was the lack of prominence of the representative annual percentage rate (RAPR) in the advertisement.
Although displayed in the advert, the RAPR was shown after viewers had been told of the discounts available to them and the speed in which the money would be debited to their accounts.
The Consumer Credit (Advertisements) Regulations 2010 (the “Regulations”) specify that an advert for credit must include an RAPR where it includes an “incentive” or an indication that credit may be available to someone who had previously considered that their access to credit was restricted. Crucially, the RAPR must be more prominent
than any such incentive or indication.
The advert featured a voice-over which stated:
“With a Pounds to Pocket 12 month personal loan you can get up to £2000 sent to your bank account in 10 minutes. Apply online 24/7 at poundstopocket.co.uk/tv and use promo code pocket94 for 20% off your first scheduled payment. No surprises or hidden fees, just fixed payments over 12 months”.
Small print in the advert stated “Representative 278% APR. Additional documentation may be required for identity verification”.
The ad then featured three characters who stated, “I could breathe for the first time in a long time as my credit history wasn’t great, but Pounds to Pocket was able to help”; “Paying the money back over 12 months made life so much easier” and “I was turned down by the mainstream lenders.
I wish I’d gone to Pounds to Pocket first, as their application was fast and simple.”
The voice-over went on to conclude, “Go to poundstopocket.co.uk/tv
and get 20% off your first scheduled payment with promo code pocket94. Pounds to Pocket, the quick and easy way to pocket a 12 month loan today.” Small print shown at the same time stated “Representative 278% APR … “.
The ad was referred to the ASA who considered two key issues.
1. Was the RAPR% was made sufficiently clear when compared to the incentives, which arguably featured more prominently; and
2. Was the claim “I was turned down by the mainstream lenders. I wish I’d gone to Pounds to Pocket first, as their application was
fast and simple” misleading and socially irresponsible, as it
portrayed Pounds to Pocket as preferable to mainstream lenders because of the emphasis on “fast and simple” loans (while their interest rates were significantly higher).
The ASA sought advice from the OFT on the issue. The OFT considered that the claims “use promo code pocket94 to 20% off your first scheduled payment” and “save 20%” were incentives within
the meaning of 6(1)(b) of the Regulations and therefore triggered the
requirement under Regulation 6(2) that the RAPR be given greater prominence than the incentive. As the RAPR did not accompany the first claim, but rather came later in the ad, it was less prominent than the incentive. In respect of the second incentive, the RAPR was in a smaller font size, in white on a moving, multi-coloured background and was therefore less prominent.
Claims that “you could get up to £2000 sent to your bank account in 10 minutes” portrayed the loan services as favourable to other creditors and therefore an incentive.
The claim was not accompanied by text stating the RAPR; this came later in the advert and therefore had not been given greater prominence.
The character’s claims that:
“I was turned down by the mainstream lenders, I wish I’d gone to Pounds to Pocket first, as their application was fast and simple” implied that credit was available to people who would normally expect to face difficulty in obtaining credit. Implying that Pounds to Pocket could be a first point of call for a prospective borrower was considered “socially irresponsible” by the ASA.
As the RAPR had not been given greater prominence than the incentives, the advert had breached BCAP code rules on misleading advertising and lending and credit. The second complaint was also
The ASA ruled that the advert could not be broadcast again in its current form.
Why this matters:
At a practical level, this case demonstrates that advertisers should always err on the side of caution when highlighting interest rates to viewers. What constitutes an incentive is likely to be construed broadly by the ASA, and as a result an advertiser must take great care to ensure that where an incentive is present, the RAPR is displayed prominently, at the same time the incentive is being
described and in the same font and size as any other text.
At a higher, regulatory level, this is an interesting example of the ASA extending its remit to adjudicate on the Regulations (for which it is not the supervisory body, this being the OFT). This shows the OFT’s willingness to “sub-contract” its adjudication and enforcement powers to the ASA.
The case also demonstrates that this kind of lending is firmly on the regulatory radar and there is appetite for actively pursuing enforcement action against lenders failing to advertise these kinds of products in line with the strict requirements of the Regulations.