Background
This Ruling forms part of a wider piece of work on unregulated investments, identified for investigation following intelligence gathered by the ASA. See also related rulings published on 13 November 2024.
Summary of Council decision:
Two issues were investigated, both of which were Upheld.
Ad description
Two paid-for Google ads for Cult Wines, a wine investment company, seen in June 2024:
a. The first ad featured text which stated, “Start a fine wine collection – Cult Wine investment. Human expertise, data-driven tech and a love for fine wine. Diversify your portfolio. Your wine investment guide. Learn how the wine market has outperformed the FTSE 100”.
b. The second ad featured text which stated, “Cult Wine Investment. Wine has a Track Record of Returns and Resilience in an Unstable Market”.
Issue
The ASA challenged whether the ads were misleading because they:
1. failed to illustrate the risks of the investments; and
2. did not make clear that past performance was not representative and did not necessarily give a guide for the future.
Response
1. Cult Wines Ltd stated that limited character counts in paid-for Google ads restricted their ability to include a full warning directly within the ad. They said they were committed to ensuring they were clear and upfront with consumers about the risk of investments, but also explained that their target audience was experienced investors who would have understood that investment returns were variable and could not be guaranteed.
Cult Wines said they provided a comprehensive overview of the potential benefits and risks associated with their investment products before an investor enrolled with them. That enrolment process was mandatory and included an in-depth discussion with a client manager.
2. Cult Wines said they included text on every page of their website which stated that past performance was not indicative of future results. They acknowledged that while they did refer to positive past performance results in their ads, they only did so because they considered those results were relevant and that it was useful information for consumers to know. They said that before an investor enrolled with Cult Wines, they were given a comprehensive overview of the wine market, including both its upward and downward trends. They said that because of limited ad space it was not possible to include all warnings, including that past performance was not representative and did not necessarily give a guide for the future.
Assessment
1. & 2. Upheld
The CAP Code required that marketing communications for investments made clear that the value of investments was variable and, unless guaranteed, could go down as well as up, and that past performance or experience did not necessarily give a guide for the future. The CAP Code further stated that material information should not be omitted and should be presented clearly.
The ASA understood that wine investment was currently not regulated in the UK, nor was it subject to the protections afforded by the Financial Services Compensation Scheme or the Financial Ombudsman Service. We considered that this was material information that consumers required in order to make informed decisions about Cult Wines’ services.Ad (a) stated, “Cult Wine investment […] Diversify your portfolio. Your wine investment guide. Learn how the wine market has outperformed the FTSE 100” and ad (b) stated, “Cult Wine Investment. Wine has a Track Record of Returns and Resilience in an Unstable Market”. However, both ads contained no text stating that investments were variable and could go down as well as up, or that fine wine investment was an unregulated market. We considered both ads also referred to the previous performance of fine wine and thus the implication from the ads was that it was likely to perform in the same way in the future. We noted, however, that the ads contained no information to explain that past performance was not a guide for the future.
We acknowledged that the footer of the website, to which the ads linked, stated that “past performance is not indicative of future results”. However, this was in small print at the bottom of the website’s landing page; we considered it was not presented immediately and clearly to consumers.
Because the ads, and the landing page, did not make clear that wine investment was unregulated, that investments could go down as well as up, or that past performance did not necessarily give a guide for the future, we concluded they were misleading.
On those points, the ads breached CAP Code (Edition 12) rules 3.1 and 3.3 (Misleading advertising), 3.9 (Qualification) and 14.4 and 14.5 (Financial products).
Action
The ads must not appear again in the form complained of. We told Cult Wines Ltd to ensure that future ads made sufficiently clear that wine investment was unregulated and that the value of investments was variable and could go down as well as up. We also told them to make clear that examples of past performance or experience were not necessarily a guide to the future.
