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 paid for Facebook ad for Solomon Global, a supplier of gold and silver, seen in June 2024 stated, “At times, it can be overwhelming to understand the gold market. With Buy Bullion, you’ll gain the knowledge and guidance you need to make successful investments”. Further text on a gold background said, “Earn 10-12%. PA How to Invest in Gold. Download Your Free Guide”. Text at the bottom of the ad said, “Request our 2024 Gold Report. Gold has averaged 11.5% per annum for the last 20 years”.
Issue
The ASA challenged whether the ad was misleading because it:
- failed to illustrate the risks of the investments; and
- did not make clear that past performance did not necessarily give a guide for the future.
Response
1. & 2. Solomon Global Ltd explained that they had previously been given legal advice and were told the sale of physical gold was not regulated by the Financial Conduct Authority (FCA) and ads for their product would not be considered a financial promotion. Similarly, they had been advised that using the word “investment” in their ads did not cause them to be considered financial promotions under the FCA’s rules. They further confirmed that they did not hold or manage their client’s funds for the purpose of investing.
They stated that physical gold, like other tangible products such as art, luxury watches, cars, art and antiques, were purchased by collectors, as gifts and for investment. However, none were considered financial products that needed risk warnings. An ad for a luxury watch, for example, would not need to warn consumers that purchasing it would not allow them access to the Financial Ombudsman or the Financial Service Compensation Scheme. They said further, to include such a risk warning for their products could mislead consumers into believing they offered financial products or services when that was not the case. They also stated that as far as they were aware no other advertisers offering similar products included such risk warnings in their ads.
They said that the landing page the ad linked to on their website did include risk warnings that stated precious metals could be volatile and their value may go down as well as up. However, they said that on receiving the complaint they had removed the ad, and any similar ads, and conducted an audit into all their advertising. In future, they would also be taking further steps to ensure their ads complied with the CAP Code. That would include text that highlighted the risk and volatility of precious metals and that historical performance did not give a guide to the future. They acknowledged that in isolation the ad did need further clarification, stating that investments could go down as well as up and that past performance did not necessarily give a guide to the future.
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 physical 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 that to be material information that consumers required in order to make informed decisions about Solomon Global’s services. In addition, the Code stated marketing communications for investments should make clear that past performance or experience did not necessarily give a guide for the future, and that the value of investments was variable and, unless guaranteed, could go down as well as up.
We noted that the ad stated, “With Buy Bullion, you’ll gain the knowledge and guidance you need to make successful investments” and “How to Invest in Gold”. Therefore, it promoted gold as an investment, not a gift or as a collector’s item, but it contained no text stating that investments were variable and could go up and down or that gold investment was unregulated. We understood that the ad had led to a landing page on the Solomon Global website that had included text about the volatility of precious metal prices, but not that it was unregulated. In addition, the relevant text was at the bottom of the page and relatively small, therefore it was not immediately visible and consumers would have had to scroll a long way to the bottom of the page to locate it. The landing page had been updated to include another risk warning that precious metals could go down as well as up. While that information appeared higher up the page than the original text – approximately halfway down the page – it was still not prominent and consumers had to scroll down to find it.
The ad further stated, “Gold has averaged 11.5% per annum for the last 20 years”. Therefore, it referred to the previous performance of gold and we considered the implication from the ad was that it would continue to perform in the same way in the future. We noted however that the ad contained no information to explain that past performance was not a guide for the future. We understood further that the landing page the ad linked to also contained no relevant warning.
While we acknowledged the changes proposed by Solomon Global, because the ad did not include risk warnings to make clear that gold investment was unregulated, that investments could go down as well as up and that past performance did not necessarily give a guide for the future, plus the landing page did not present that information immediately to consumers, we concluded that it was misleading.
The ad 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 ad must not appear again in its current form. We told Solomon Global Ltd to ensure that future marketing made sufficiently 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 to the future.
