Background
This Ruling forms part of a wider piece of work on unregulated investments, identified for investigation following intelligence gathered by the ASA.
Summary of Council decision:
Two issues were investigated, both of which were Upheld.
Ad description
A press ad by Harrington & Byrne, a coin retailer, seen on 30 May 2024, featured headline text which stated, “Own the brand new 2024 UK Gold Sovereign today” accompanied by images of both sides of the coin. Further text stated, “Struck in 22 Carat Gold […] The combination of precious metal content along with real long-term numismatic significance has made the Sovereign one of the most popular ways that you can own gold […] The even better news for collectors is that the 2024 UK Gold Sovereign is available VAT-Free and does not attract any Capital Gains Tax […] due to the constant fluctuations in the market, which has seen gold hit record highs in recent months, there is a real potential for sharp increases in price, we can only guarantee this price for 2 days.”
Issue
The ASA challenged whether the ad was misleading because it:
- failed to illustrate the risks of investments; and
- did not make clear that past performance was not representative and did not necessarily give a guide for the future.
Response
1. & 2. Harrington & Byrne Ltd said that the ad had nothing to do with investment. At no point did they state that the UK Gold Sovereign was an investment vehicle or should be purchased as an investment and all the language used within the ad was factual only. They said by using the word fluctuation, by definition, they were stating that the market could go both up and down, which they believed was an accurate reflection of the gold market.
Harrington & Byrne provided information in the form of graphs which they said showed the gold market over: 24 hours; a month; six months; annually; and over a decade. They said the information showed that the price of gold had increased by over 20% in the last 12 months. Despite that, they intentionally had not said that in the ad to avoid any contention that they were advertising the coin as an investment. They presented the coin as a piece for collectors, including the claim “The even better news for collectors”. The only reference to potential sharp increases in prices, was in relation to the retail price of the coin being guaranteed for only two days.
They said that statements about the variability of investments, the gold being unregulated and that past performance did not necessarily give a guide for the future, were irrelevant for a coin that was being offered as a collectors’ piece; therefore, there was no reason to include them in the ad. They believed the ad complied with a complaint about a similar ad which was previously resolved informally by the ASA. However, they were willing to remove the claim “there is a real potential for sharp increases in price” and to make other amendments to the ad where necessary.
Assessment
1. & 2. Upheld
The CAP Code required that material information should not be omitted and should be presented clearly. The ASA understood that the gold investment market was not regulated within the UK, nor was it subject to the protections afforded by the Financial Services Compensation Scheme or the Financial Ombudsman Service. We considered this was likely to be material information that consumers required in order to make informed decisions about Harrington & Byrne’s services. In addition, the CAP Code further 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. They should also make clear that past performance or experience did not necessarily give a guide for the future.
If they were used in marketing communications, examples of past performance or experience should not be unrepresentative.We acknowledged that the ad referred to the Gold Sovereign coin as having “numismatic significance” and as being “for collectors”. However, the ad featured the claim, “due to the constant fluctuations in the market, which has seen gold hit record highs in recent months there is a real potential for sharp increases in price”.
While fluctuations could mean that retail prices of the coin were variable, we considered that consumers would primarily have understood from the claim that positive fluctuations in the gold market had caused gold prices to rise and they would continue to rise. The claim therefore suggested it was a good time for consumers to purchase the coin to take advantage of the future successes of gold and therefore it was presented as an investment. We also considered the claim that the coin “does not attract any Capital Gains Tax” further added to the overall impression that the coin was being presented primarily as an investment purchase. However, the ad did not include any text which stated that the value of investments could go down as well as up or that gold investment was unregulated.
The ad further stated that high gold prices had been the pattern of recent months. Therefore, it made a reference to past performance of gold, but there was nothing in the ad that explicitly stated past experience was not a guide for the future.
Because the ad did not include any risk warning to make clear that the value of gold investments could go down as well as up, that it was an unregulated activity and did not make clear that past performance was not necessarily a guide for the future, we concluded it was misleading and breached the Code.
On points 1 and 2 the ad breached CAP Code (Edition 12) rules 3.1, 3.3 (Misleading advertising), 3.9 (Qualification), 14.4 and 14.5 (Financial products).
Action
The ad must not appear again in its current form. We told Harrington & Byrne Ltd that their future advertising must make clear that gold 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 for the future.
