The Committee of Advertising Practice (CAP) Code provides general guidance on advertisements for financial products and services but recognises that financial advertising is subject to numerous statutes and regulations. The Background gives a brief summary of relevant legislation and the rest of the section mirrors, to some extent, the requirements set out in those regulations. For example, the Code requires marketers to present their products in a way that can be easily understood by the audience addressed and to state that past performance is not necessarily a guide to future performance and that, unless guaranteed, the value of investments can go down as well as up.
In brief, the Code generally covers financial marketing communications that are not regulated by the Financial Conduct Authority (FCA) . Ads for products by FCA-regulated businesses (for example, those by banks, building societies, insurance companies, stockbrokers or mortgage companies) are likely to be outside the Advertising Standards Authority (ASA)’s remit.
The CAP Code does, however, regulate “non-technical” aspects of financial marcoms, such as matters relating to offence, social responsibility, superiority claims, fear and distress, competitor denigration and claims that do not relate to specific characteristics of the product, which are likely to be within the ASA’s remit. For example the ASA investigated a complaint that the use of the Financial Services Authorities and the Citizens Advice Bureaus logo in an ad gave the misleading impression that they endorsed the advertiser’s service. Because they did not, the ad was considered misleading and the complaint was upheld (Premier Financial Recoveries, 22 December 2010). The ASA has also adjudicated on marcoms that have not made clear: the terms and conditions of a financial offer (Peter Vardy Ltd, 8 February 2012); the description and availability of a “100% Finance” offer (BMV Property Direct Ltd, 15 February 2012); and the obligation to enter into a financial agreement (Lawrence of Kemnay Ltd, 13 July 2011).
The Code covers ads about tangible investments (for example, race horses, gold coins, paintings or direct property schemes but not collective schemes), property or investment seminars, government investments services and investment-related software. Marketers should check carefully the scope of the relevant statutory regulations. In 2011, the ASA investigated a complaint about an ad for a holiday lodge purchase and rental scheme. The ad gave information about the nature and benefits of the scheme but did not make clear that the value of investments could go down as well as up, as required by rule 14.4. The ASA ruled that the ad should have included a statement to that effect (THPD Properties Ltd t/a Yaxham Waters 9 March 2011). The ASA has investigated complaints about products in the financial sector that are not regulated by statute, such as ads for property investment schemes (Galdwish Land Sales Ltd, 4 August 2004) and software designed to aid investors (MCI Technologies Ltd, 16 November 2004). As well as section 14, marketers should consider the general rules, ensuring, for example, that they hold rigorous evidence to support profit claims.
If you are unsure about the legislation and the need to comply with, please note that the FCA does not pre-approve proposed financial marketing communications for authorised firms. For technical guidance on specific matters or rule interpretations only, please marketers should contact us.
Although complaints received about technical aspects of financial ads in non-broadcast media are usually referred to the FCA, it is worth noting that the way the ASA deals with complaints about cross-media campaigns can have an impact on non-broadcast remit: the ASA might investigate complaints about technical aspects of non-broadcast financial ads that form part of a cross-media campaign. The ASA has a statutory responsibility to investigate complaints about broadcast advertisements, and, in liaison with the FCA, will consider complaints about technical aspects of financial services ads in broadcast media. If it receives a complaint about a technical aspect of a financial services campaign across both non-broadcast and broadcast media, instead of referring the complaint about the non-broadcast advertisement to the FCA, the ASA will liaise with the FCA and consider complaints about the ads in both media.
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