| HBOS plc (was Halifax plc) and
the ASA
The ASA is the independent, self-regulatory body for non-broadcast
advertisements in the UK. They administer the British Codes of Advertising
and Sales Promotion to ensure that ads are legal, decent, honest and
truthful.
All complaints upheld by the ASA against HBOS plc and Halifax plc are
also held on
http://www.halifaxsucks.co.uk.
In November 2000, the author saw what he believed to be misleading
advertisements promoting Intelligent Finance products from the HBOS (was Halifax)
Group. The correspondence relating to this complaint are below.
The ASA have now upheld this complaint, and and
details of their adjudication are here.
My Letter To the ASA (7 Nov
00)
My letter to the ASA (12 Jan
01)
The ASA's Adjudication (from 14
Feb 01)
The Halifax, has had a further complaint against it upheld by the ASA on
28 February 2001. Full details of this second upheld complaint
within one month are here.
My letter to the
ASA (7 Nov 00)
Advertising Standards Authority
2 Torrington Place
London
WC1E 7HW
7 November 2000
Dear Sirs
Re: Halifax Group advertisements
The purpose of the letter is to complain about the
misleading advertisements currently being shown in the press (Daily
Telegraph and others) for Intelligent Finance, a bank within the Halifax
Group.
Example 1: And pay no interest
This first advertisement suggests that you can get a
personal loan and pay no interest and the caption in bold suggests that
the interest rate falls from 10.5% to 0% APR.
However, this is not the whole truth since, at worst
case, the investor would forego the 5% that he would have received from
his current account, so the real interest saving would be 10.5 - 5%, ie
5.5%. But, it would be a very naive investor to borrow with an unsecured
personal loan when the investor has funds of his own. The example
therefore is unrealistic and as such I believe it constitutes misleading
advertising.
Example 2: 10.8% interest on a current account
This example suggests that an account holder can earn
10.8% on a current account, but to effectively achieve this the investor
would need to leave a balance on his credit card which would incur 10.8%
interest.
Effectively, if you borrow at 10.8% on a credit card
and receive interest at 10.8% on a current account, your position is
neutral. Any normal person would use his current account balance to pay
off the credit card balance and so maintain this neutral position.
However, what the Halifax is suggesting in bold is that they will pay "A
MASSIVE 10.8% ON YOUR CURRENT ACCOUNT" I believe this
advertisement to be highly misleading, as there is no statement that the
borrower has to pay 10.8% too.
Example 3: 10.8% interest on savings
This example is similar to example 2, but here savings
are referred to instead of a current account. The table shows interest
receivable with savings of between £1 and £100,000+.
Here again, 10.8% is only received, if it is also
paid on a credit card balance, and so the position is neutral; there
is no net 10.8% interest receivable. This advertisement is also very
misleading
Summary
To summarise, I believe that the Intelligent Finance,
part of the Halifax Group is having published advertisements which are
************.
Not everybody is astute in financial matters, and if
these advertisements are read at face value, I believe people will be
misled. It is my view that yourselves have a duty of care to protect the
less well informed.
Could I ask you to review this complaint and advise if
you believe any action should be taken against the Halifax.
Yours faithfully
J P Perry
Fax: +44 8701 641212
email: JohnPerry@redoak.co.uk
homepage: http://www.redoak.co.uk
Attachments:
Photocopies of Daily Telegraph advertisements
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My
letter to the ASA (12 Jan 01)
Ms Xxxxx
Advertising Standards Authority Limited
2 Torrington Place
London
WC1E 7HW
12 January 2001
Dear Ms Xxxxx
Re: Halifax PLC T/A intelligent Finance A00-09984\LCR\erd
Further to my letter to you dated 10 January 2001, I
would again like to complain about a rerun of the Halifax Intelligent
Finance advertisements that are almost identical to the ones that resulted
in my complaint being provisionally upheld.
I am enclosing an extract from the Daily Telegraph
dated 11 January 2001.
Again, in large bold letters the Halifax are offering a
personal loan at 0% APR. Even the smaller writing to the right of the bold
headline gives no indication that there is "a catch".
It is only when reading the small print at the bottom
of the page that the real facts are partially revealed. The implied
savings are from 10.5% down to 0%, but the real saving is the difference
between the interest paid and interest received which is no more that a
few percent.
****************.
Could I therefore please ask that you pursue this
complaint too.
Yours sincerely
J P Perry
Fax: +44 870 164 1212
email: JohnPerry@redoak.co.uk
homepage: http://www.redoak.co.uk
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The
ASA's Adjudication (from 14 Feb 2001
ASA
The Advertising Standards
Authority Limited
2 Torrington Place
London WCIE 7HW
Telephone 020 7580 5555 Fax 020 7631 3051
Internet http //www asa org uk
Please Quote: A00-09984\LCR\erd
Mr J Perry
Redoak
29 January 2001
HALIFAX PLC T/A INTELLIGENCE FINANCE
The ASA Council has now ruled that the complaint adjudication should
be reported as attached. The report will be published on the ASA website
at www.asa.org.uk on 14 February and we ask you to treat it as
confidential until then.
Yours sincerely
Xxxx Xxxxxx
COMPLAINT FINAL
REPORT
CASE NUMBER A00-09984/LCR
ADVERTISER : Halifax plc
trading as
Intelligent Finance
8 Lochside Avenue
Edinburgh Park
South Gyle
Edinburgh
EH12 9DJ
AGENCY : Union Advertising Agency
MEDIUM : National press
PUBLIC COMPLAINTS : Fife, Leicester, Hampshire & Suffolk
COMPLAINT:
Objections to three advertisements for a bank
a) One advertisement was headlined "INTELLIGENT
FINANCE IS THE ONLY BANK THAT WILL PAY YOU A MASSIVE 10.8% AER/GROSS' ON
YOUR CURRENT ACCOUNT." The advertisement featured a picture of two
people driving a van and carried the caption "NOW WE'RE
MOTORING". The body copy stated "You should have your current
account with Intelligent Finance. Why? Well our basic rate on current
accounts is 5% AER/GROSS, but if you also have an Intelligent Finance
credit card, you could earn a massive 10.8% AER/GROSS on your current
account. Intelligent Finance is the only bank which makes any combination
of banking products work together, in a way that suits you, to make you
better off...". The footnote stated "We give you the choice of
maximising the interest you receive or minimising the interest you pay us.
If you choose to earn 10.8% AER/GROSS on your current account you will
still pay 10.8°% on your outstanding credit card balance...".
b) Another advertisement was headlined
"INTELLIGENT FINANCE IS THE ONLY BANK THAT WILL PAY YOU A MASSIVE
10.8% AER/GROSS' ON YOUR SAVINGS". The advertisement featured a
picture of a woman on the phone and carried the caption "WHEN IT
COMES TO MY SAVINGS, SIZE DOES MATTER " The body copy stated
"You should be banking with Intelligent Finance. Why? Not only do we
offer the full range of banking products but we are the only bank to make
any combination of them work together, in a way that suits you, to make
you better off. For example, when you have savings and a credit card with
Intelligent Finance, your savings could earn a massive 10.8% AER/GROSS."
The footnote stated "We give you the choice of maximising the
interest you receive or minimising the interest you pay us. If you choose
to earn 10.8% AER/GROSS on your savings you will still pay 10.8% on your
outstanding credit card balance...".
c) The third advertisement was headlined
"INTELLIGENT FINANCE IS THE ONLY BANK WHERE YOU CAN GET A PERSONAL
LOAN AND PAY NO INTEREST*". It featured a picture of a man on a
mobile phone saying "WHERE DO I SIGN?" The body copy of the
advertisement stated "Strange but true. If you had an unsecured
personal loan of £3,000 with Intelligent Finance and a total of £3,000
in your Intelligent Finance savings and/or current account, you could pay
no interest on your personal loan. Intelligent Finance is the only bank
that offers this. At Intelligent Finance not only do we offer you the full
range of banking products but we also make them work together, in a way
that suits you, to make you better off. Sounds good?..". A separate
section of the advertisement showed the figure 10.5% APR with an arrow
below pointing to 0°/" APR. The footnote stated "We give you
the choice of maximising the interest you receive or minimising the
interest you pay us If you choose to have 0% APR on all or part of your
outstanding personal loan balance, we will not pay interest on a
corresponding part of your current account or savings...". The
complainants objected that:
1. advertisement (a) was misleading, because the
headline clam was contradicted by the significant conditions that to
obtain 10.8% AER/gross consumers had to have both a credit card with the
advertisers and a current account balance equal to their credit card
balance;
2. advertisement (b) was misleading, because the
headline claim was contradicted by the significant conditions that to take
advantage of the offer consumers had to have a credit card with the
advertisers and a savings balance equal to their credit card balance; and
3. advertisement (c) was misleading, because it implied
that the interest rate on the loan fell from 10.5°/" to 0°/".
The complainant challenged that implication because consumers would
forfeit the interest normally awarded on a bank account and their interest
rate would not therefore fall by the advertised amount.
(Ed 10: 7.1)
ADJUDICATION:
The advertisers believed the advertisements were not
misleading and the headline claims were not, contradicted by significant
conditions. The -3dvorf!sers said 'he advertisements were part of a
campaign that was due to run until the end of the year 2000.
1. Complaints upheld
The advertisers argued that the body copy stated
clearly that the basic rate earned on their current account was 5% AER but
that if consumers had an Intelligent Finance credit card they could earn
up to 10.8°/" AER. The advertisers pointed out that the footnote
gave a more detailed explanation of how Intelligent Finance products could
be used together. The advertisers pointed to the qualifications "We
give you the choice of maximising the interest you receive or minimising
the interest you pay us" and "If you choose to earn 10.8°/o AER/gross
on your current account, you still pay 10.8% APR on your outstanding
credit card balance". The Authority was concerned that the headline
stated "...the only bank that will
pay you a massive
10.8°% AER/GROSS` on your current account"
whereas to obtain that rate consumers had to pay the same rate of interest
on the outstanding balance on their credit card which had to be maintained
at the same or more than the balance of their current account. Although it
acknowledged that the footnote stated that consumers would have to pay the
same interest on their outstanding credit card balance as the interest
they received on their current account, the Authority considered that that
was a significant condition that should be stated in the body copy of the
advertisement.
2. Complaints upheld
The advertisers asserted that the body copy of the
advertisement stated clearly that if consumers had an Intelligent Finance
savings account and credit card they could obtain 10.8% AER on their
savings account. The advertisers re-asserted that the footnote provided a
more detailed description of how their products could be used together.
The Authority noted the footnote featured descriptions similar to those in
the footnote of advertisement (a). The Authority was concerned that the
body copy of the advertisement merely stated the benefits of the offer and
did not state the corresponding interest that would need to be paid on the
credit card. Although it acknowledged that the footnote gave more details
of the nature of the offer, the Authority considered that the offer should
be made clear in the body copy of the advertisement.
3. Complaints upheld
The advertisers pointed out that the box containing the
figure 10.5% APR with an arrow pointing to 0% APR was placed after a clear
example of how 0% interest could be achieved. The advertisers said the
example stated that if consumers had a personal loan of £3,000 and a
savings or current account of £3,000 they could pay no interest on the
loan. The advertisers believed the footnote explained that by stating
"We give you the choice of maximising the interest you receive or
minimising the interest you pay us." and "If you choose to have
0% on all or part of your outstanding personal loan balance, we will not
pay interest on a corresponding part of your current account or
savings". Although it noted the advertisers' comments, the Authority
considered that, because the body copy of the advertisement did not make
clear that consumers would have to forfeit the interest on their savings
or current account, the headline claim was misleading.
The Authority noted that the advertisers' financial plan was designed
to enable consumers to link the money they have and the money they have
borrowed. The Authority noted the advertisers took into account the money
consumers had deposited with them before they calculated the interest on
outstanding debts, such as credit card, personal loan or mortgage. The
Authority was concerned that the body copy of the advertisements did not
make clear that to obtain the rates of interest cited in the headline
claims consumers had to pay a similar rate of interest on an alternative
product. The Authority considered that the
conditions of the offer were not clear and that the advertisements were
misleading. It asked the advertisers to consult the Committee of
Advertising Practice before advertising their Intelligent Finance products
again.
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The documents here are from scanned and OCR'd
letters and if any part of these pages are found to be
incorrect in any way, they will be corrected immediately. If you
read this document and believe there is an error, I will check with the
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