Background
Summary of Council decision:
Five issues were investigated, all of which were Upheld.
Ad description
An advertorial for Mark Liddle LLP insolvency advisors in a local business magazine included an interview headed "New partner loves job in insolvency". Text stated "Gemma Laurent, new partner at Mark Liddle llp tells us why she enjoys her work so much. This month Dorset Business talks to Gemma Laurent, who has recently become a partner at insolvency advisers Mark Liddle llp about life, business and why she believes you should never talk to an Insolvency Practitioner". Further text included "DB: What is the difference between an Insolvency Practitioner and an Insolvency Adviser? GL: An IP, as they are known, is licenced by the government their regulatory body [sic] and has a legal duty to the creditors of a business in difficulty, an insolvency adviser has no such duty. That means we can focus entirely on helping the owners and directors", "DB: So what can people do about it? GL: Call us, don't let your accountant or bank suggest you talk to an IP. You know that if you owe HMRC overdue tax, an IP has a legal duty to them before you - so why invite them into your business? We can negotiate on your behalf, talking to banks and other creditors in a way that gives you the best chance of getting through the tough times. We can advise you on your options and give you good solid, impartial advice - an IP is not allowed to do that because his duty is set down in law and it is to your creditors". And "DB: So you have no regrets in leaving the world of IP and becoming an advisor? GL: Not one. It is so rewarding to be able to help people in need. To see businesses turn around and thrive again, or business owners start again with enthusiasm and self-belief. When you work for an IP and see the huge fees they charge and the way some business owners are treated, it is hard to feel proud of what you do - spending all day shutting down companies and selling everything off to raise as much money as you can for a bank or HMRC, or just to cover your costs. Now I enjoy what I do and get thanked by people for helping them". A separate section of the ad was headed "Word that describes company perfectly" and included text that stated "You see, to us, all those unpaid creditors are secondary to the big issue of how we help you move forward and create a really successful business, or get out without losing everything so you can get on with your life".
Issue
The Association of Business Recovery Professionals (R3):
1. objected that the ad denigrated Insolvency Practitioners (IPs) and discouraged business owners from consulting them.
They also challenged whether:
2. the ad misrepresented the work of IPs by implying they could not advise business owners and were only involved in shutting down companies, whereas they said that IPs were also involved in other formal insolvency procedures that enabled businesses to continue trading and also offered advice without a formal insolvency procedure in place;
3. the claim "the huge fees they charge" was misleading, because they said that charges depended on the case, were not all determined by the IP and safeguards were in place to ensure creditors had a say in the fees charged by an IP;
4. the ad misleadingly implied that directors' duties to creditors of their company could be avoided; and
5. the ad misleadingly implied that it was never necessary to use an IP, whereas they said that formal insolvency proceedings may be necessary in some circumstances and in that case the office holder dealing with the proceedings must be a licensed IP.
Response
Mark Liddle LLP said that they did not believe the interview was an 'advertorial', but that it was comment only and represented the views of partner Gemma Laurent. They said her views were subjective and based on her own personal experience and knowledge.
They said the ad appeared in the Dorset Business Magazine, which was a publication sent to local businesses with an emphasis on news and was also a forum for local businesses to give their views. They therefore believed the average reader would be an individual with some level of business sense and would realise that articles published in the magazine were subjective.
1. They did not agree the ad denigrated IPs or discouraged business owners from consulting them and said it was clear from the reference to "why she believes" that the opinions expressed were Mrs Laurent's beliefs. They said the interview gave a balanced view to businesses and made clear there were other options beside IPs. They said IPs were well established and that businesses should be given the opportunity to explore other options. They said unlicensed practitioners such as their company were often judged unfairly by IPs. They said the views expressed in the interview were factual, based on experience or referred to in other IPs' advertising material.
2. They did not believe the ad misrepresented the work of IPs by implying they could not advise business owners and were only involved in shutting down companies. They said the interview explained the differences between IPs and insolvency advisors, and it was therefore necessary to explain the work of IPs to avoid implying they were the same thing. They said the statement that IPs were licensed by the government and had a legal duty to creditors was factual. They said many IPs emphasised this duty in their own advertising. They said it was also a fact that insolvency advisors could give impartial advice to businesses on their options, without being bound by a legal duty to creditors. They said the purpose of the interview was for Mrs Laurent to explain why she did not regret leaving the world of IPs and her own experience of what the role entailed. They said she merely expressed the constraints she personally felt in performing her job as a result of IPs' legal duties to their creditors.
3. They said the reference to "huge fees" was based on Mrs Laurent's own experience compared to the fees she saw incurred as an insolvency advisor, and that it was clearly opinion. They said they therefore did not have to justify the fees, which they said R3's website said could "seem high". They provided an R3 document relating to fees charged by IPs.
4. They did not believe the ad implied a director's duties to creditors of the company could be avoided. They said the interview stated that insolvency advisors could negotiate with creditors and merely explained the differences between IPs and insolvency advisors. They said the statement that "we can advise on options" did not imply duties to creditors could be avoided. They said duties to creditors clearly needed to be considered when businesses were in a poor financial position and that was why directors sought professional assistance.
5. They did not believe the ad implied it was never necessary to use an IP and said they accepted there were circumstances when it would be necessary and required to do so. However, they said that insolvency advisors could advise business of their options, which included appointing an IP where necessary. The intention of the interview's wording was to communicate that in Mrs Laurent's opinion an insolvency advisor should be the first port of call and that businesses should not feel restricted to only consulting an IP. They believed this would have been understood by readers.
Assessment
Mark Liddle LLP said they did not believe the interview section of the ad was advertorial, and said it was merely the opinion of one of their partners. However, the ASA understood that the interview appeared as part of a page that was paid for advertising space, and we noted the page was headed "Mark Liddle". We therefore considered the interview formed part of the ad, along with the column that appeared next to it headed "Word that describes company perfectly", and that it was marketing material and therefore within the remit of the ASA.
1. Upheld
Mark Liddle LLP believed the views expressed in the ad were subjective opinion only. Although the claims appeared in an interview style section of the ad, we considered they went beyond subjective opinion and were presented as factual statements. The CAP Code stated that marketing communications must not discredit or denigrate another product, marketer, trade mark, trade name or other distinguishing mark. The ad made reference to IPs and included a number of negative statements such as "you should never talk to an [IP]", "don't let your accountant or bank suggest you talk to an IP", "why invite them into your business", "when you see the huge fees they charge and the way some business owners are treated it's hard to feel proud of what you do". We considered that the general tone of the ad was highly negative towards IPs, discouraged business owners from consulting them and also implied they were not able to assist businesses because of their legal duties to creditors. We therefore concluded that the ad denigrated Insolvency Practitioners.
On this point the ad breached CAP Code (Edition 12) rule 3.42 3.42 Marketing communications must not discredit or denigrate another product, marketer, trade mark, trade name or other distinguishing mark. (Imitation and denigration).
2. Upheld
Mark Liddle LLP said the ad merely described the differences between IPs and insolvency advisors and that the references to an IP's legal duty were factual. We understood that although IPs did act in formal insolvency procedures not all of these involved the closure of a business and they were also able to advise businesses about other options that did not involve formal insolvency. We considered that although the ad was in a magazine targeted at business, those reading it were unlikely to have an in depth knowledge of the differences between IPs and insolvency advisors. The ad referred to the legal duty of IPs and then stated that an insolvency advisor "has no such duty. That means we can focus entirely on helping the owners and directors". It also stated "We can advise you on your options and give you good solid, impartial advice - an IP is not allowed to do that because his duty is set down in law and it is to your creditors" and referred to "spending all day shutting down companies". Although the claims appeared in an interview style section of the ad, we considered they went beyond subjective opinion and were presented as factual statements. We considered the ad, and these claims in particular, implied that IPs were only involved in shutting companies down and they were therefore not able to provide advice about the options available to business owners. Because that was not the case we concluded the ad was misleading.
On this point the ad breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
3.3
3.3
Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means.
and
3.6
3.6
Subjective claims must not mislead the consumer; marketing communications must not imply that expressions of opinion are objective claims.
(Misleading advertising),
3.7
3.7
Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation.
(Substantiation),
3.38
3.38
Marketing communications that include a comparison with an unidentifiable competitor must not mislead, or be likely to mislead, the consumer. The elements of the comparison must not be selected to give the marketer an unrepresentative advantage.
(Other comparisons) and
3.42
3.42
Marketing communications must not discredit or denigrate another product, marketer, trade mark, trade name or other distinguishing mark.
(Imitation and denigration).
3. Upheld
Mark Liddle LLP said the claim that IPs charged "huge fees" was subjective opinion only. However, although the claim appeared in an interview style section of the ad, we considered it went beyond subjective opinion. The CAP Code stated that comparisons with unidentifiable competitors must not mislead or be likely to mislead the consumer, and that the elements of the comparison must not be selected to give the marketer an unrepresentative advantage. The advertiser supplied a document from R3 which they said showed the complainant accepted the fees could seem high. However, the document was designed to address concerns that the fees of IPs could "at first glance" seem high, but that they believed they were good value, and went on to address the issue in further detail. We therefore concluded the claim had not been substantiated.
On this point the ad breached CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. and 3.6 3.6 Subjective claims must not mislead the consumer; marketing communications must not imply that expressions of opinion are objective claims. (Misleading advertising), 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation) and 3.38 3.38 Marketing communications that include a comparison with an unidentifiable competitor must not mislead, or be likely to mislead, the consumer. The elements of the comparison must not be selected to give the marketer an unrepresentative advantage. (Other comparisons).
4. Upheld
The ad appeared in a magazine targeted at businesses and we therefore considered that those reading it were likely to be aware that they had legal obligations to any creditors of their company. However, we considered that the negative emphasis on the legal duty of IPs to creditors, and the fact that insolvency advisors were described as not having the same duty in claims such as "to us, all those unpaid creditors are secondary to the big issue of how we can help you move forward and create a really successful business, or get out without losing everything" implied that, by going to an insolvency advisor rather than an IP, business owners would be advised of other options open to them and they may be able to avoid their legal duties to creditors. Because we understood that was not the case we concluded the ad was misleading.
On this point the ad breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
3.3
3.3
Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means.
and
3.6
3.6
Subjective claims must not mislead the consumer; marketing communications must not imply that expressions of opinion are objective claims.
(Misleading advertising),
3.7
3.7
Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation.
(Substantiation),
3.38
3.38
Marketing communications that include a comparison with an unidentifiable competitor must not mislead, or be likely to mislead, the consumer. The elements of the comparison must not be selected to give the marketer an unrepresentative advantage.
(Other comparisons).
5. Upheld
Although Mark Liddle LLP acknowledged that there were situations in which an IP must be used, we considered the ad implied this was not the case. Claims that "you should never talk to an [IP]" and "don't let your accountant or bank suggest you talk to an IP" specifically stated that businesses should never use an IP. We therefore concluded the ad was misleading.
On this point the ad breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
3.3
3.3
Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means.
and
3.6
3.6
Subjective claims must not mislead the consumer; marketing communications must not imply that expressions of opinion are objective claims.
(Misleading advertising),
3.7
3.7
Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation.
(Substantiation),
3.38
3.38
Marketing communications that include a comparison with an unidentifiable competitor must not mislead, or be likely to mislead, the consumer. The elements of the comparison must not be selected to give the marketer an unrepresentative advantage.
(Other comparisons).
Action
The ad must not appear again in its current form. We told Mark Liddle LLP to ensure that they did not denigrate their competitors, that claims were supported by robust evidence and that comparisons were not likely to mislead.
