Examination of Witnesses (Questions 1532
- 1539)
TUESDAY 24 FEBRUARY 2004
MR ANDREW
BROWN, MR
JIM ROTHWELL,
MR CHRISTOPHER
GRAHAM AND
MR ROGER
WISBEY
Q1532 Chairman: I think all of the
second group of witnesses were present at the start of our proceedings,
so there is no need to repeat my general preamble, but simply
to welcome Andrew Brown, Jim Rothwell, Christopher Graham and
Roger Wisbey. I should declare that I have known Andrew Brown
a very long time as two of the organisations that I advise are
actually members of the AA, and although I do not think either
of them are planning to advertise gambling products, I thought
I should just make that clear. Can I ask you all first, how would
you describe the current laws relating to the advertising and
gambling products in the UK and the regulation of the advertising
which is permitted now?
Mr Brown: I think the starting
point really is the position the Home Office used to adopt which
was that nothing should be allowed which stimulated demand and
that was in place up until, well, during the 1990s, but obviously
it came under some kind of stress as a consequence of the launch
of the Lottery. Indeed I remember writing to Lord Brooke at Heritage
on the very issue in 1993. I think what has happened is that there
has been a degree of relaxation dependent on the nature of the
gambling activity, but the rules are still very strict and prohibitive
at what is seen to be the hard end of the spectrum. The really
very modest deregulation which was allowed in relation to casinos
still only allows casino advertising to appear in the classified
sections, so for somebody who wants to find information about
a casino can go to a classified section to try and find some information.
The advertising has not been deregulated in a way which enables
it to seek out its own customers. Bingo is much more liberally
treated.
Mr Graham: So far as the regulation
of the non-broadcast side of things is concerned, which is the
only thing I can speak about, I think we would say, as we said
in our submission to you, that we have detected only a fairly
small compliance problem over the last five years. We have had
about 1,000 cases in all about issues relating to betting and
gaming and very often it may be a question of offensive advertising
or perhaps misleading advertising. Sometimes the issues are not
strictly confined to betting and gaming issues, but we think that
the system we have of self-regulation and partnership between
advertisers, agencies and media with the Office of Fair Trading
being the legal backstop for misleading advertising is working
well. We had 14,000 complaints overall last year about 11,000
ads and a very, very small proportion of those were about concerns
about betting and gaming. I think the figures we gave you were
for 2002, but I do not expect the 2003 figures are very different.
We dealt with 103 in that year, of which 13 required investigation
and I think 11 were breaches of the Code. So we think that it
is something that is under control and we would like to see that
approach continued in the new regime.
Q1533 Chairman: That leads nicely
to the next question because the clause dealing with all this
and also the offence of advertising unlawful gambling has still
not been published. How helpful are the policy notes which the
Government published earlier this month in enabling you to understand
the proposed regime for the advertising of gambling products in
the future?
Mr Brown: I think it is a very
helpful note, but I thought there were three areas that certainly
we would like to explore a little further. I am not quite sure
what is meant by "technical content in advertisements"
and what the Government has in mind. There seems to be a difference
between the way the Government sees Ofcom and the way the Government
sees the ASA and we would quite like to explore why that difference
exists. I think as an advertising trade association we are probably
less enamoured of the Financial Services Authority model than
the note implies.
Chairman: We will come on to both of
those issues. Can we look at the regulatory model first. Lynn
Golding?
Q1534 Baroness Golding: I was interested
in what you said about advertising. For the first time ever this
week I saw an advertisement with a big roulette wheel on it, certainly
the length of that desk on a huge, huge advertising board near
a town centre. It is the first time I have ever seen that. Are
you having discussions with the DCMS? I know you have had two
but are you having further and how difficult is it going to be
to wind back what is already happening?
Mr Brown: We have certainly had
discussions with the DCMS and they are on-going really and this
is part of the process. Our belief is that the Gambling Commission
should fulfil a backstop role and should obviously control via
licence the advertising environment, but what we do not want in
a world of increasing media complexity is yet another advertisement
content regulator coming into being. We are trying to simplify
things for consumers rather than having sector by sector content
regulators. Within the licensing regime of the Gambling Commission
system of control I think it is very sensible to delegate advertisement
content regulation to existing advertisement content regulators.
They do it in almost every other sector of business. The policy
note implies that is going to happen in Ofcom; the question is
should it apply to the ASA.
Mr Graham: It does seem to us
a little odd when everyone else is talking about establishing
a one-stop shop, for a Bill to be talking about a specialist boutique
for dealing solely with gambling. Perhaps I could just add that
the Advertising Standards Authority had very constructive discussions
with the Department and we very much welcome the idea that the
Gambling Commission would consult with the Advertising Standards
Authority and also I hope the Committee of Advertising Practice,
who are the industry body that writes the Code. We do not have
any problem with the offence of advertising illegal gambling.
We welcome the flexibility for a degree of self-regulation but,
like Andrew Brown, we are puzzled by what these technical issues
might be that will be reserved to the statutory regulator. The
example that is given in the policy note—and everyone is
waiting to see the detailed section set out in the Bill—talks
about statements in advertising about the relative odds, but that
is exactly what we do. If you look at our submission, page 4,
Appendix A, it gives some highly technical adjudications about
odds. This is an example of misleading advertising under the Control
of Misleading Advertisements Regulations. We are recognised as
the established means and this is what we deal with. We would
find it a bit odd to deal with all sorts of other examples of
misleading advertising and then have to go to statutory regulation,
which we think will be confusing for consumers. I think the Committee
has to be clear. You have to decide which route you want to go.
If you want it to be regulated by statute then we have to withdraw.
A good example of that is the Financial Services and Markets Act
where we simply had to give up on a whole area of regulation because
it is statutorily controlled by the Financial Services Authority,
or another example is the Office of Fair Trading or trading standards.
It would obviously be double jeopardy and we simply could not
get the co-operation of advertisers, agencies and the media with
our investigations if they were in danger of being dragged before
a statutory authority. Our feeling is that the best approach is
to see what the Committee of Advertising Practice could do in
response to changes in the law because obviously the code has
to reflect what is going on and if you are regulating an industry
the code would need to change and then perhaps the Gambling Commission
would use the powers under the Bill to fill any gaps that they
felt were not covered. I am willing to bet that there would not
be a lot for them to do because we could tackle them.
Q1535 Lord Brooke of Sutton Mandeville:
Clearly, Chairman, I declare an interest as a former correspondent
with Mr Brown. I can guess what his response will be to the question
I am about to ask, given his comments that he is less enamoured
than some about the FSA model in this particular instance. Of
course my query will also embrace the ASA. What is your view of
the FSA model for the advertising of financial products and how
far has it been a success?
Mr Brown: Obviously there are
aspects of what the FSA does which are well outside our competence
or remit to comment on; they are regulated in lots of different
ways. As far as the advertising dimension is concerned, I think
the business finds it opaque. Consumers who make complaints are
not told the results of adjudications. There are no adjudications
published unless they particularly want to bandstand on some particular
judgment. It is a very large and expensive regulator. I see that
they issued a statement last week that in the last six months
of last year they handled nearly 300 cases of misleading adverts
in total, of which 118 were referred to the Authority by members
of the public. The ASA ordered changes to be made to 73 different
advertisements from 63 separate firms. That is fine but it is
very difficult, I think, to train the industry. They ran some
training not long ago for financial service providers and the
IPA, which is the trade body that represents advertising agencies,
asked whether they could send out any agency personnel on this
training course and they were told no they could not because they
were not a financial service provider. It seemed ludicrous as
they were preparing the advertisements on which this body adjudicates
and eventually that objection was overturned. I think they are
seen to be powerful but lacking in transparency so in that sense
not very effective in managing the advertising dimension of their
remit.
Q1536 Lord Brooke of Sutton Mandeville:
I have got a fairly clear picture of what your view was. Does
the ASA want to say anything?
Mr Wisbey: Just to emphasise something
Andrew said a little earlier. We feel that consumers, and indeed
our own staff, get confused about the intricacies of the overlap
between the ASA and the FSA and indeed trading standards officers
who also have a role to play in financial services advertisements.
It is confusing, and one of the advantages that the ASA has is
the greater degree of flexibility it has to change things. A couple
of years ago I was on a working group at the FSA looking into
past performance in advertisements and that particular subject
was researched in very great depth. Lots and lots of discussions
took place at the working group and also outside and it was handled
by the FSA in discussions with the industry, but we were looking
at it for two years and it was an awful long time afterwards before
anything came out of it.
Q1537 Lord Brooke of Sutton Mandeville:
I have one supplementary question—and for this I should
declare an interest as a former Chairman of the Building Societies'
Ombudsman Council—of the complaints to which you were referring,
statistically, did any of those come in complaints to the Ombudsman,
who of course is under the FSA, or did they come specifically
to the FSA itself??
Mr Brown: I am afraid I do not
know the answer but I will find it out.
Q1538 Viscount Falkland: Could I
pursue a little further matters on which we have already touched,
in other words dual regulation and double jeopardy. You have made
some strong recommendations to the Committee in your written evidence
and you have amplified that to an extent already here this morning.
Could you say more precisely how exactly you think the Bill could
be amended to take account of the concern about both dual regulation
and double jeopardy?
Mr Graham: I think we would like
the Bill to recognise the concept of regulation through established
means and perhaps if you look to the Communications Act you will
see the new regulator Ofcom was urged to deregulate where possible
and consider whether effective self-regulation would be a good
way of delivering their statutory obligations, and I think that
prompt is what has got us to a position where Ofcom is considering
a proposal for the one-stop shop to which I referred. The concept
of established means was the way in which the Control Misleading
Advertisements Regulations were implemented in the UK from the
EU Directive. In other words, if you have got a system that works,
replicating it in statute may actually be counter-productive.
It would make our job much more difficult, and confuse the consumers,
who very often do not know who they should be talking to. I think
its flexibility and fleetness of foot, to which my colleague Roger
Wisbey referred, does give us a considerable advantage over rather
more cumbersome and slow-moving statutory regulators. I would
suggest that the power to make regulations governing the advertising
of legal betting and legal gaming might well be held in reserve
by the Gambling Commission. I do not know whether you write that
on to the Bill or whether that is just how they should conduct
themselves. It is about the chicken and the egg. If the Gambling
Commission says we are charged by Parliament to do a code and
they do a code, then we have to say that is another area that
is statutorily regulated and we just have to move back. However,
if the Gambling Commission keeps its powder dry and sees what
the Committee for Advertising Practice comes up with, then all
it has to do is fill the gaps, because of course CAP would know
that Gambling Commission was there in the background to make sure
that the consultations were effective and to produce a good code.
We are not in the business, and we cannot be in the business of
implementing someone else's code. It is a self-regulatory system
whose strength is the interplay of advertisers, agencies and media
and if we are seen as simply runners of the state, the system
does not work. So if the Bill specifies or if the Gambling Commission
interprets the Act as saying they must have a code, they have
also got to have a system to enforce it. They cannot just look
to the ASA to provide a cheap industry funded source of running
a statutory code. So Parliament will have to decide or the Gambling
Commission may have to decide which way it is run. I am perfectly
confident that by talking to the Department and by talking to
the Gambling Commission that a self-regulatory system can develop
satisfactory rules that everyone would be happy with. If it goes
the other way it gets very complicated.
Q1539 Chairman: Mr Graham and Mr
Brown will remember my argument for this system during the Standing
Committee of the Ofcom Bill and in the end the Government did
change its mind. As you are pressing for this to be done with
the gambling industry, can you tell us how the experience so far
with Ofcom has worked out? I know it is early days but I would
be interested to know.
Mr Brown: I think the board meeting
they are having is tomorrow. We made a proposal to Ofcom on behalf
of the industry on 1 May last year and it has undergone a considerable
amount of discussion. Ofcom have been very thorough and positive
about it and a three-month public consultation finished at the
end of January. I think they are still dissecting the results
of that and discussing them at their board meeting tomorrow, so
I do not quite know what colour the smoke will be coming out of
tomorrow's meeting as yet. We have still got on-going meetings
with Ofcom which are positive. The Communications Act encourages
them or demands that they promote and encourage effective self-regulation,
and that is one of the solutions.
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