Insurer Admiral offered a full money back guarantee within 14 days if the same policy could be found for less elsewhere. But was this offer misleading given that distance sales laws already confer a 14 day unconditional cancellation right? We report the ASA’s verdict at
Who: Admiral Insurance Services and the Advertising Standards Authority
When: June 2005
The ASA dealt with a complaint in respect of a poster for car insurance headed "Cheaper car insurance or your money back – guaranteed!"
The body text of the poster said that so confident was Admiral that it was cheaper that it guaranteed your money back if you found a cheaper quote within 14 days of receiving your documents.
The complainant pointed out that regardless of this guarantee, the advertisers had a statutory obligation under the Financial Services (Distance Marketing) Regulations 2004 ("Regulations") to refund unconditionally a customer if a contract was cancelled within 14 days in any event. Accordingly, it was suggested that the ad exaggerated the benefit of choosing Admiral's service over its competitors and was therefore misleading and contrary to the CAP Code.
The ASA considered the matter but threw the complaint out.
In its defence, Admiral said that it was well aware of its obligations under the Regulations, but the aim of this advertisement was to make customers aware of their rights in relation to the price of the product. They had no intention of suggesting that the money back guarantee was a benefit over and above those offered by their competitors, rather to advertise their confidence in their prices.
The ASA noted the Regulations and the unconditional right which they introduced to cancel an insurance contract for whatever reason within 14 days. However it also noted that providers were permitted under the Regulations to retain money for administration and for the period of cover between the start of the contract and cancellation, whereas in this case Admiral was offering a full refund of the total amount paid by the punter, even though the consumer might have been on cover for all or part of the 14 day period.
In the circumstances, Admiral was offering a benefit over and above what was required by the Regulations and the complaint was not upheld.
Why this matters:
It is interesting to note from the report of the case that Admiral itself did not apparently pick up on the point which swung it for them in front of the ASA. This was the fact that under the Regulations it was open to an insurer to deduct administration fees and a pro rata amount in respect of the benefit of cover received pre-cancellation.
By offering to forego their rights in this regard, Admiral was offering something over and above what the law allowed, so according the to ASA, insurance advertisers can continue to flag up such offers without fear of it being alleged that the law requires them to do that anyway. Presumably, the Financial Services Authority which regulates all insurance advertising in parallel with the ASA but has much sharper teeth, will be of the same view, though neither body is promising to follow the opinions of the other!