Examination of Witnesses (Questions 1540
- 1559)
TUESDAY 24 FEBRUARY 2004
MR ANDREW
BROWN, MR
JIM ROTHWELL,
MR CHRISTOPHER
GRAHAM AND
MR ROGER
WISBEY
Q1540 Chairman: It gives them an
option, does not it?
Mr Brown: Yes it does.
Q1541 Chairman: Would it be your
view that that would be a way, going specifically to Lord Faulkner's
question, of incorporating this opportunity within the Bill, so
it is neither ruled out or formally ruled in?
Mr Brown: I think it is a real
opportunity and it is a real opportunity because of the existence
of licences. It does seem to me, if you look at conventional broadcasting
advertising as a business, compliance with the Ofcom code is a
condition of having a licence, so in broadcast terms the broadcasters
are held responsible for what they transmit rather than the advertisers
because they are the licence holders. In the non-broadcast system
the advertisers are held responsible and the media become gatekeepers
because they will not run advertisements against adjudications
made by the ASA. In the case of gambling it seems to me that we
have an additional sanction which is the ability to say that a
condition of the licence is compliance with the Code as part of
that licence, so you have an additional, quite specific heavyweight
sanction that you can apply to either broadcast code or non-broadcast
code.
Mr Graham: That is certainly true.
I think the Ofcom board meeting is today but I do not expect that
we will get puffs of smoke for quite some time because there is
a lot of practical work to do on memoranda of understanding and
so on. On the particular point of what should be in the Bill,
I do not think you need to be as formal as the contracting out
process which Ofcom is contemplating with the self-regulatory
system for advertising. In fact I think it would be an unnecessary
complication. I think provided the Bill has a power which the
Gambling Commission can hold in reserve to step in if, in their
view, the regime is not an adequate one, you can probably leave
it at that. I think in the broadcast world one can understand
why the necessary statutory codes and implementation of them has
to be contracted out, but I do not think you need to go to quite
such lengths with this. I would simply say give the Gambling Commission
the power to step in if necessary; in other cases leave it to
the established means to see what they can do and then it is up
to the industry and self-regulatory body to deliver, and if we
do not deliver then something else will be implemented.
Q1542 Jeff Ennis: Continuing on this
line of question, Chairman, what do you feel would be the resource
implications for the Gambling Commission if it were to regulate
the advertising of gambling products?
Mr Brown: It is difficult to be
precise. It is difficult to know what level of complaints might
be generated. It does seem to me that there is not going to be
a lot of complaints generated in broadcast because broadcast advertising
is pre-cleared prior to transmission, and if the codes are well
put together then it seems to me you may get objections to the
advertising of a casino because it is a casino but it does not
necessarily mean that the advertisement is wrong. In a number
of broadcasts which go across a lot of other media—and Chris
gave some indication of the number of complaints—I would
have thought that is a relatively modest number which does not
require an enormous amount of resource. I suspect—and I
wish the FSA did more of it—if you are going to have a dedicated
system managing complaints, it ought to advise advertising agencies
proactively about the right and wrong way of tackling it, and
that does become quite time-consuming.
Mr Graham: They do have to go
the whole nine yards and it could be an unnecessary additional
cost. They need to establish a code, they then need to have a
consumer awareness campaign because nobody would know about this
and we would spend all our time at the ASA passing on complaints.
They would have to have a complaints handling system and they
would have to have a proper system of investigation. They would
then have to have an adjudicatory body and these days, with human
rights considerations, they would have to have an appeal and review
function. I think it is absolutely essential they would offer
some advice to the industry on the interpretation of their code.
That is all something that would have to be catered for and it
may be you say recoup it from the industry but it is a doubling
up of the work we are doing anyway because we are going to advertisers
on misleading and offensive ads.
Mr Rothwell: Chairman, it might
also be worth mentioning the fact that in the Financial Services
Authority's Annual Plan for 2004-05—and the FSA has been
responsible for advertising of financial services products since
2000—they have just announced the setting up of a completely
new department with responsibility for advertising so obviously
they are having to expand the existing resources a couple of years
down the line since they have become responsible for this.
Q1543 Jeff Ennis: So in value funding
terms it is a no-no, shall we say, from your perspective?
Mr Brown: I think it will be disproportionately
expensive as a stand-alone thing. Lots of things are and sometimes
it is necessary that they are, but I think the existing system
can manage the problem so it seems to me that it is an unnecessary
form of investment and expense.
Q1544 Lord Donoughue of Ashton: On
the specialness of gambling and advertising, I think concerns
have been expressed about the separate and special regulation
of this sector but the Bill does treat and socially we treat gambling
as a separate activity, potentially more dangerous than many other
activities, so I would like to ask you what special considerations
do you accept as being applicable to the advertising of gambling
adverts?
Mr Brown: I think we probably
need to do a lot more work on it and I think we would discuss
it with people like GamCare who do understand problem gambling.
The advertising industry obviously does welcome every new category
of advertising but that is not the same as not accepting that
the advertisements have to be responsible. If one looks at the
codes governing alcohol one finds some quite good steers about
avoiding appealing to young people, avoiding excessive drinking
(or in this particular case playing) and avoiding publications
that have particularly young audiences. I think there are whole
areas like that and some of them are captured in the National
Lottery Code anyway so I would have thought it would be relatively
easy to put together a code which would be tougher than the existing
code that the ASA administers but would still allow legitimate
businesses to compete and compete responsibly.
Q1545 Lord Mancroft: Could you go
a little bit further in one particular area. What expertise does
the ASA have in the context of betting and gaming advertisements
and how effective do you think you have been up to now in regulating
them?
Mr Graham: I think our record
is pretty good. We have been going for more than 40 years. We
are recognised as the established means for the control of misleading
advertisements regulations and we are effective within the current
highly regulated circumstances, so for the Committee would that
approach continue to be effective if we liberalised in the way
that is proposed in the Bill? The appendix to our submission I
think shows that we are effective. I have given you the numbers
of the ads that seem to indicate the extent of the problem, which
is not very great at the moment. I think it also shows the expertise
that we can bring to bear and if we have not got the expertise
in-house we can send out for an expert who has got it. The executive
which is dealing with investigations builds up a lot of obscure
knowledge about everything from vacuum cleaners to betting odds.
The Council of the ASA also have various areas of expertise. One
of our members is Lord Lipsey, who may have come and given you
evidence wearing his greyhound hat. You cannot get a faulty adjudication
about betting odds past David Lipsey.
Q1546 Chairman: He would advise you
on the claims made by these advertisements?
Mr Graham: It is the job of the
Council to look at recommendations that come from the executive
and to say, "Do we agree with this?" It is anecdotal
but it just so happens that one of Lord Lipsey's areas of expertise
is betting and he always picks us up if we get it wrong.
Q1547 Chairman: We appreciate that
he would, yes!
Mr Graham: As I say, in the sort
of challenges that we have from consumers—of course it is
not just about complaints, we also do compliance work and monitoring—there
may be objections to the product. A lot of people have principled
conscientious objections to gambling. That is not an objection
under the British Code of Advertising, Sales Promotion and Direct
Marketing but obviously people need to have their say. We are
not going to uphold a complaint based simply on "I think
that gambling is wrong." If someone thinks a particular advertisement
is anti-social or it is encouraging children to participate, the
British Code of Advertising, Sales Promotion and Direct Marketing
has a general provision about misleading and offensive advertisements
but there is also a section on betting and gaming which makes
it clear that you have a social responsibility and should not
encourage excessive gambling and it should not be aimed at the
under 18s, it must not be placed in media where more than 25 per
cent of the audience is under 18, and so on and so on. At the
moment the specific rules are quite sparse because Parliament
has decided that gambling is pretty well-regulated. Liberalise
that and CAP will obviously want to revise the code, will they
not?
Mr Brown: On the question of expertise,
I think it is standard practice not only in the ASA but also in
the pre-clearance system for broadcasting for regulators and self-regulatory
systems to use experts. Given that the markets they cover are
vast and some of them are really quite technical—such as
medical health care—Ofcom make available the experts they
go to in various categories. In that sense it seems to me that
the ASA behaves in exactly the same way. It is not a difference
between the self-regulatory and statutory system; they all use
outside experts. I am sure, coming back to the issue of technical
issues raised in the DCMS paper, if there is an anxiety about
understanding one would go to somebody who understands, and that
is standard practice.
Q1548 Lord Mancroft: If the ASA were
to be responsible for gambling advertisements, how would you envisage
working with the Gambling Commission?
Mr Graham: Closely, in same way
we are working very closely with the Department at the moment.
We believe very strongly in joined-up regulation. We are close
to the Office of Fair Trading and the Trading Standards departments
and to other regulatory bodies such as ICSTIS or the Medicines
Control Agency. It is absolutely what we do—to try and provide
a system that is effective for consumers and for competitors to
maintain a level playing field, so it would not be anything new
to us and we welcome the opportunity of working with the new Commission.
Q1549 Chairman: They might have some
of the expertise which you would need in-house and presumably
you could make use of that?
Mr Wisbey: Yes, they would be
one of the sources of expert advice.
Q1550 Jeff Ennis: On this point,
Chairman, would the relationship/partnership with the Gambling
Commission be on an equal partnership basis or would you see any
contributions they had to make as being some type of interference?
Mr Graham: As long as you do not
write it into the Bill!
Mr Brown: The way the ASA Council
works is that its decisions are sovereign but there is a review
and appeals mechanism. Therefore, if you got a statutory regulator
like the Gambling Commission, the last thing you want is interference
in individual decision-making because it obviously undermines
the system and undermines the sovereignty of the ASA Council.
Having said that, it does seem to me going to them for advice
about expert matters and helping the ASA Council about the adjudication
is important. From CAP's point of view, as authors of the code,
discussing the code with the Gambling Commission before it came
into being would be essential. It seems to me that they remain
a powerful force because they remain the provider of licences,
which is the ultimate sanction, and they remain a source of wisdom
in difficult decisions and action, to be honest. The system is
operating on their behalf.
Mr Graham: I suppose it is also
true to say that they are the backstop regulator here because
if we were dealing with an advertiser who is persistently breaking
rules we would certainly draw that to the attention of the Gambling
Commission because it would be a prima facie breach of
the licence which the Gambling Commission would want to investigate.
That would be one of the sticks we would have in our cupboard.
Q1551 Jeff Ennis: Would it be a question
of you going to them for advice when you felt it appropriate or
would it also be the case of them being able to come to you unannounced,
shall we say?
Mr Graham: The way we do it with
the Medicines Control Agency is we have a regular liaison meeting
and we have a regular liaison meeting with the Office of Fair
Trading. It could be done that way and I am sure that they are
not going to be backward in coming forward.
Q1552 Mr Page: In your response to
Lady Golding, quite understandably you said that you do not want
to see proliferation of sectoral control. On a narrow point, with
the gambling operators, who should take responsibility for their
statements on web sites and statements in their places of operation?
Mr Brown: They should, in my view.
There is no way that has yet been evolved for policing of web
sites. The ASA does look at a lot of advertising on the Net but
what they say in their premises and what they say on their web
sites is really their responsibility and it may be a trading standards
issue, but it certainly is not regarded as advertising, and web
sites and internal material is outside our remit.
Mr Graham: But we do apply the
codes to advertising in paid for space. I can think of a number
of on-line casino firms who are doing a lot of advertising in
banners, pop-ups, commercial e-mails, SMS messages, SPAM, and
that is all within our remit. What we are not seeking to do is
patrol all the corporate web sites in the world and distinguish
between editorial and advertising and I do not think any regulators
try to do that. Certainly the previous ITC said, "We will
not try and regulate the Internet", and I think Ofcom would
probably take the same view. One has to be clear about what can
and cannot be done.
Q1553 Mr Page: I appreciate that
but the question had two parts, the first is web sites and the
other was operators' premises.
Mr Brown: The advertising content
regulators do not have any remit about what happens in store in
a retailing environment, for example. That is deemed to be an
outside remit, as are web sets which are deemed to be editorial
publishing material.
Mr Graham: Or shop windows.
Mr Brown: It is quite a tricky
area.
Q1554 Mr Page: I know.
Mr Brown: The advertising that
by and large falls within our remit is where money changes hands,
where somebody is actually buying some space, and then you have
got some leverage to address the issue. If a retailer decides
to put something up in a shop and no money changes hands it is
very tricky to—
Q1555 Mr Page: Even if it is a misleading
advert?
Mr Brown: If it is completely
misleading it would be trading standards, but it is not deemed
to be within the remit of the advertisement regulator.
Q1556 Mr Page: I think you will appreciate
how difficult it is to get trading standards involved in anything!
Mr Brown: Indeed.
Q1557 Mr Page: They are under-resourced
and under pressure and it seems to me this is a huge loophole
which people will use and implement.
Mr Brown: It may be a loophole
but it has always existed. What goes on in retail premises, in
this particular case they are licensed retail premises so the
person who supplies the licence presumably has some form of leverage
in the same way that the DCMS would if something goes on in pubs
and bars. They are the provider of the licence but they are not
the provider of a licence to Selfridges.
Q1558 Chairman: So the kind of advertisements
that you can see in the window of most betting shops these days
saying that Manchester United will win 3-0 and van Nistelrooy
will score the first goal, they are not regulated, they are outside
your remit?
Mr Graham: They are regulated
by trading standards.
Q1559 Chairman: You do not get complaints
about that?
Mr Graham: If we do we then have
to refer them to trading standards. It is no different to the
complaints we get about sex shop displays for example, and I will
not mention a well-known brand. Or similar complaints about displays
in connection with clothing stores that may be at the leading
edge of appeal to the youth market. We can regulate the way they
advertise and use their trade name in non-broadcast advertisements,
posters, magazines, newspapers, cinema ads, on the Internet, text
messages, e-mails, we can do all that, but what we cannot do is
stop people wearing their stuff that has the same slogans on or
march into the shops saying we do not like that display.
Mr Brown: Because of the existence
of the licence it does seem to me that you have a point of leverage
on the outlet which makes it different from almost all other outlets,
with the exception of pubs.
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