Note: This advice is given by the CAP Executive about non-broadcast advertising. It does not constitute legal advice. It does not bind CAP, CAP advisory panels or the Advertising Standards Authority.
In section 14, the 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.
What aspects are considered subject to the Code?
Social responsibility for short term loans
Irresponsible lending and Christmas
What aspects are considered subject to the Code?
In brief, the Code generally covers financial marketing communications that are not regulated by the Financial Conduct Authority (FCA). Technical aspects of non-broadcast 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 ASA’s remit.
Most consumer credit, hire and brokerage ads are regulated by the Consumer Credit Act 1974 and the Consumer Credit (Advertisements) Regulations 2010, and in April 2014 the Financial Conduct Authority (FCA) assumed responsibility for consumer credit regulation.
However “non-technical” aspects of consumer credit marcoms (for example, offence, social responsibility, superiority claims, fear and distress and competitor denigration) are likely to fall within the remit of the CAP Code.
Social responsibility for short term loans
Advertisers should be particularly careful to ensure that marketing for high interest, short terms loans is socially responsible. In 2012 the ASA upheld a complaint about a website that featured images of a woman with shopping bags. It considered the images suggested the woman spent borrowed money to go on a shopping trip to make non-essential purchases, and was therefore likely to be seen as encouraging frivolous spending (Sunny Marketing Ltd, 19 December 2012). Similarly, in 2013 the ASA ruled that a text stating "Hi Mate I'm still out in town, just got £1000 in my account from these guys www.firstpaydayloanuk.co.uk" was irresponsible because it suggested a loan should be used to fund a social life (First Finance (UK) Ltd 19 June 2013). See Short term and payday loans for further information.
Responsible lending and Christmas
The ASA has previously upheld complaints against marketers whose ads encouraged taking out loans to assist with Christmas spending. These ads were looked at as part of wider piece of work on social responsibility in ads for loans offered for Christmas.
In 2024, the ASA investigated an ad that featured the claims “With a hassle-free Christmas Loan, you can take the stress out of Christmas” and “Cherish every moment of the holidays, without fretting over your budget” along with an image of someone relaxing with their feet up. While the reference to ‘hassle free’ was acknowledged as being in relation to the application process, the ASA considered that the ad implied that taking out a Christmas loan would avoid the financial worry associated with Christmas. The ASA considered that the ad encouraged taking out a loan to fund Christmas spending in a way that was irresponsible, and therefore breached the Code (Capital Credit Union Ltd, 28 February 2024)
Also in 2024, an ad featured claims such as “Make Your Christmas Merrier Than Ever With PCCU”, and “Need some extra cash to make this Christmas unforgettable? Look no further!”. The ASA considered that claims, such as these, suggested those who were struggling financially could obtain loan to spend more than they would otherwise have been able to afford on seasonal purchases. They concluded that the ad encouraged the taking out of a loan to fund Christmas spending in a way that was irresponsible, and therefore breached the Code (Pennine Community Credit Union Ltd t/a PCCU, 28 February 2024). See Credit unions for further information.
CAP is unable to give advice on the law. We recommend marketers seek professional advice if they are unsure how their business might be affected. Copies of the regulations can be found here and here.
See Financial Products and Services, Insurance, Financial products and services: Credit Unions and Motoring: Finance and Leasing.