Committee for Advertising Practice debt management advertisements Enforcement Notice
23 June 2022
Today, the Committee for Advertising Practice (CAP) published a new Enforcement Notice about debt management ads by insolvency practitioners and lead generation companies. The Enforcement Notice can be found here.
The IPA are pleased to have worked with CAP and we fully support the Enforcement Notice, as it is seen as an effective means of targeting the potential harms caused in ads directed at consumers with debt problems. Insolvency Practitioners (IPs) must be extremely careful to ensure that any advertising that leads to an appointment is responsible and does not mislead.
The Advertising Standards Agency (ASA) has published several rulings about Individual Voluntary Arrangement (IVA) and Protected Trust Deed (PTD) ads. The ads offered consumers a way to write off debt in government approved schemes.
In summary, the Enforcement Notice summarises that IVA/PTD ads must:
- Clearly state the risks and fees involved
- For lead generators, include a clear and prominent statement that they are a lead generation company which will pass on customer leads to third parties.
Ads must not:
- Imply association or approval from government, debt charities or regulated advisory bodies.
- Claim that customers“can write off up to 85% of their debts” or similar in the absence of robust documentary evidence
- Exaggerate the simplicity or speed of the process or claim that customers can “lower your debt today” or similar.
Requirements for IPA members
There are two clear and important requirements from the Ethical Code for IPs in respect of advertising:
- that an IP ‘shall be satisfied that any advertising, marketing or other form of promotional activity’, ‘pursuant to which the insolvency appointment might have been obtained … has complied with relevant codes of practice and guidance in relation to advertising’ (R360.6). The Enforcement Notice and this notice is an important piece of guidance. It is important that IPs are aware that the principles apply to all forms of insolvency appointments and not just those that advertise in respect of IVAs and PTDs.
- Where an insolvency practitioner or the firm obtains work via a third party or a third party conducts marketing activities on behalf of the insolvency practitioner or the firm, the insolvency practitioner shall be responsible for ensuring that the third party follows the application material above. IPs should review and retain evidence of checks undertaken in respect of advertising by any third parties they engage with. The third parties should be made aware of the IP’s responsibilities. These requirements apply through the whole customer journey, whether that is via regulated or unregulated entities and ideally it is expected that IPs either retain evidence of this journey on every case or must be able to demonstrate the journey to their regulator.
IP action on advertising
IPs should immediately check their own direct advertising and ensure that they have appropriate procedures to check any advertising that leads to their appointments. They need to ensure that all relevant advertising, in all forms, complies with the Enforcement Notice. If there is any doubt, ASA/CAP provide a useful copy checking service. An important part is the sponsored words such as Google Ads. Due to the FCA’s IP exemption, an IP cannot directly promote advice to discuss bankruptcy or Debt Relief Orders when they can only offer IVA or PTD as a debt solution.
From Monday 25th July, the CAP Compliance team will take targeted enforcement action to ensure a level playing field, which may include – where advertisers are unwilling to comply – referral to Trading Standards or an appropriate recognised professional body.
IPs should be aware that they have been required to abide by published rulings. Notwithstanding this, the IPA will allow the same grace period to allow IPs to review the relevant advertising journey for their clients. In the meantime, the IPA encourage members to continue to report advertising breaches directly to the relevant platform. The Money Advice Trust produced a useful guide to report misleading adverts. To help improve the standard of advertising further, the IPA welcomes notification of any IP linked advertising that breaches the current guidance. Please send any relevant enquires to email@example.com.
Commenting on the release of the Enforcement Notice, David Holland, Chief Inspector at the IPA, said:
“The CAP Enforcement Notice is an important step in ensuring that that all advertising for debt management services is done in a responsible way, so that it minimises all potential harms and reduces the possibility that anyone could be misled. Individuals in financial difficulties must be able to easily consider the various debt solutions available in a balanced way. We have seen big improvements in advertising in recent years from direct IP-led advertising, but there is still room for improvement across the whole sector. The Enforcement Notice will enable the IPA as regulators to take more direct action and importantly assist with raising standards across all regulated and unregulated parties.”