Background
This Ruling forms part of a wider piece of work on social responsibility in ads for loans offered for Christmas, identified for investigation following intelligence gathered by the ASA. See also related ruling published on 28 February 2024.
Ad description
A paid-for Meta post for PCCU, a credit union, seen on 14 November 2023, featured text which stated “Get Christmas wrapped up early with a PCCU Christmas Loan”. Beneath was a video of two mugs filled with marshmallows and smiley faces on them with text which stated “Save the Christmas Stress with a PCCU Christmas Loan”. Smaller text underneath stated “Make Your Christmas Merrier Than Ever With PCCU Celebrate the festive season with joy and financial ease! [celebration emojis] Need some extra cash to make this Christmas unforgettable? Look no further! Our Christmas Loan is here to spread the holiday cheer and help you create lasting memories with your loved ones [gift and celebration emojis]”.
Issue
The ASA challenged whether the ad irresponsibly encouraged consumers to spend more than they could afford by taking out a loan to fund Christmas spending.
Response
Pennine Community Credit Union Ltd t/a PCCU said their objectives were to help their members improve their long-term financial health and give them access to affordable credit. Credit unions were often the ‘lender of last resort’ and in many cases prevented people from accessing high-cost credit or succumbing to illegal money lenders that could have a longer and more detrimental impact on people’s financial circumstances. They were only able to offer credit at or under their statutory interest rate cap of 3% per month and although they were not covered by consumer credit regulation, they acknowledged that they still had an ethical obligation to lend responsibly and to follow the consumer credit regulation as guidance.
Many households, especially those on a low income, would need a line of credit to help spread the cost of their expenditure for Christmas over the year. Christmas was a stressful period, where there was increased risk of people turning to high-cost credit options to ease their financial pressures. They offered a variety of free to open savings accounts, including a ‘Christmas club’. By joining PCCU, people could get not only an affordable loan to spread the cost of Christmas, but also be prepared for the next year’s festive period and extra expenses throughout the year.
In reference to the current cost of living crisis, they believed it was important that affordable lending was marketed to those who needed it most. Many of their members were financially vulnerable so an “unforgettable Christmas” could mean being able to afford one present for a loved one or covering the additional food spend to have a Christmas dinner. They did not believe that the images in the ad were lavish or encouraged overspending and did not target any vulnerable customer groups.
Assessment
Upheld
The ASA acknowledged that credit unions were often the only option of financial assistance for many consumers who would not be considered creditworthy by mainstream banks and who might otherwise turn to high-cost or illegal money lenders to obtain credit. We also understood that credit unions provided services which helped their members build their credit rating. However, as with any credit provider, consumers would be required to repay what they had borrowed, with interest, and there would be consequences if repayments were not made on time. The ad promoted PCCU’s Christmas loan and we therefore focused our assessment on whether the ad presented that product responsibly.
The ad featured the claims “Get Christmas wrapped up early”, “Make Your Christmas Merrier Than Ever With PCCU”, and “Need some extra cash to make this Christmas unforgettable? Look no further! Our Christmas Loan is here to spread the holiday cheer and help you create lasting memories with your loved ones”. We acknowledged Christmas was a time when people did need extra money to cover additional costs such as buying gifts, extra food to celebrate Christmas Day or travel expenses incurred by visiting family. However, we considered the statements “spread the holiday cheer”, “make your Christmas merrier than ever” and “make this Christmas unforgettable” encouraged consumers to obtain a loan to spend at Christmas in an extravagant way. Therefore, the claims suggested that those who were struggling financially could obtain a PCCU Christmas loan to spend more than they would otherwise have been able to afford on seasonal purchases.
The ad also included the statements “Save the Christmas Stress with a PCCU Christmas Loan” and “Celebrate the festive season with joy and financial ease”. We considered those statements made light of the decision to take out a loan and encouraged consumers to use a loan to overspend at Christmas.
For those reasons we 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.
The ad breached CAP Code (Edition 12) rule 1.3 (Responsible advertising).
Action
The ad must not appear again in the form complained of. We told Pennine Community Credit Union Ltd t/a PCCU to ensure that future ads did not irresponsibly encourage excessive spending through the use of credit, particularly in relation to Christmas spending.
