Advertising rules for IVAs and PTDs
The UK Committee of Advertising Practice (CAP) has launched a market-wide enforcement project about advertisements placed by lead generation companies and licensed insolvency practitioners (IPs) which ultimately advertise services for individual voluntary arrangements (IVAs) or protected trust deeds (PTDs).
CAP writes the advertising rules, which are enforced by the Advertising Standards Authority (ASA), the UK’s independent advertising regulator.
The ASA has published several rulings about advertisements which offered consumers a way to write-off debt through IVA and PTDs. Further to these rulings, and given concerns about the market as a whole, CAP has now produced and published an Enforcement Notice (‘the Notice’) which will be followed with active monitoring, applying sanctions where necessary.
The Notice sets out the scope of the requirements and contains sections dealing with:
- Social Media/Search/Display Advertising (on/offline)
- Video advertising
- Influencer marketing
The overall purpose of the Notice is to ensure potentially vulnerable consumers are not misled when IVA and PTD services are being advertised.
The Notice sets out in detail the rules around what advertisements must not state or imply, what must be included and, in relation to video advertising, rules around the presentation of text. Some of the key rules are that advertisements must not state or imply that:
- there is an association with, or approval from, government, debt charities or regulated advisory bodies.
- eligibility is guaranteed, or eligibility checks are quick or straightforward.
- the service or advice is 'free'.
- the service is particularly relevant for a specific targeted demographic.
- customers can write-off a specified proportion of the debts, in the absence of robust documentary evidence to back up those claims.
Code of Ethics
Many of the practices targeted by the advertising rules set out in the Notice already breach some of the sections of the Insolvency Code of Ethics (‘the Code’), specifically section 2330 on agencies and referrals as well as section 2360 dealing with advertising and marketing for insolvency appointments.
The Code specifically makes IPs responsible for actions relating to their own advertisement and promotion and that of any third-party when accepting an appointment from them. IPs are encouraged to revisit the relevant provisions of the Code but it is particularly worth highlighting the requirements to:
- consider the fitness for purpose of the third party to whom a referral is proposed or an agency arrangement is being considered, to address the needs of the recipient of the service. (R2330.5).
- address the threats to compliance with the fundamental principles when permitting the introduction of services or products. (R2330.11)
- be satisfied that any advertising, marketing or other form of promotional activity pursuant to which an insolvency appointment considered for acceptance might have been obtained:
a.has been fair and not misleading
b.has avoided unsubstantiated or disparaging statements
c.has complied with relevant codes of practice and guidance in relation to advertising
d.has been clearly distinguishable as advertising or marketing material, and has been legal, decent, honest and truthful. (R2360.6)
IPs and lead generators should undertake a detailed review of the Notice and take immediate steps to check advertising and make any changes required. Some practical steps to consider are noted below:
- Consider the source of referrals. The Notice does not apply to advertisements placed by FCA-authorised debt advisers for example (although other, similar, rules apply in these circumstances).
- Consider all forms of advertising. The scope of the Notice is very widely drawn and applies to all media placed by UK companies or targeted at UK consumers. This includes paid-for advertisements in all traditional and digital media, including TV and radio, and non-paid-for advertising online, such as websites, email marketing and any social media presence, including influencer and affiliate marketing.
- If using the services of a lead generator that falls within the scope of the Notice then IPs should be mindful to carry out their own diligence on the generator’s advertising practices. Reliance on a statement by the lead generator that they are operating within the advertising rules is insufficient in terms of both the Notice and the Code.
- If an IP is in doubt about whether a form of advertising or marketing is appropriate, the IP may consider consulting with their authorising body or the ASA.
The Notice is effective immediately. However, recognising that media copy and placement can be carried out some time prior to publication, active targeted monitoring of compliance and enforcement activity will start from 25 July 2022.
Complain about advertising
Complaints about advertising should be addressed to ASA and can be submitted using their online complaints portal. This is the quickest and best way for inappropriate advertising to be dealt with.
Additionally, where advertising which breaches the Notice requirements can be linked to an IP taking appointments from that advertising then complaints should be submitted via the Insolvency Service Complaints Gateway.
ICAS strongly welcomes the publication of the Notice and fully supports CAP and ASA taking these steps. The issuing of clear parameters for advertising and promotion of IVA/PTDs is helpful and will support the protection of vulnerable consumers. ICAS has committed to CAP and ASA to work alongside them with regulatory action where necessary and appropriate to do so.