Letter from the Advertising Standards
Authority
1. INTRODUCTION
AND SUMMARY
OF THE
ASA SYSTEM
1.1 The Advertising Standards Authority
(ASA) is the UK self-regulatory body responsible for ensuring
that all ads, wherever they appear, are legal, decent, honest
and truthful.
1.2 The ASA is grateful for the opportunity
to provide written evidence to this inquiry.
1.3 The ASA has regulated non-broadcast
(eg print, outdoor) advertising for more than 40 years. The ASA
is recognised by the Government and the Office of Fair Trading
(OFT) as the established means for enforcing the Control of Misleading
Advertisements Regulation (1988) (as amended); the OFT acts as
the ASA's legal backstop regulator for the purposes of these regulations.
The success of advertising self-regulation was recognised in 2004
when Ofcom contracted-out the regulation of broadcast (TV and
radio) advertising to the ASA system. The decision was approved
by Parliament and permitted under the current legal framework
of the Television without Frontiers (TWF) Directive.
1.4 This contracting-out arrangement created
a "one-stop shop" for advertising content standards
in the UK. There are effectively two systems operating behind
a single shop front: a self-regulatory system for non-broadcast
advertising and a co-regulatory system for broadcast advertising.
1.5 A synopsis of the UK's system of advertising
self-regulation and co-regulation is attached at Annex 1. Further
information can be found at www.asa.org.uk and www.cap.org.uk
1.6 The ASA is a member of the European
Advertising Standards Alliance (EASA).[1]
Advertising self-regulation is a recognised and, reliable means
of ensuring high levels of consumer protection across the EU25
via EASA members.
2. SELF-REGULATION
AND CO
-REGULATION
2.1 The ASA one-stop shop enjoys the support
of the Government, regulators, advertisers and consumers and is
a model that is internationally admired. We are rightly proud
of our work and are keen that it should continue.
2.2 The ASA agrees that a level playing
field for industry and high levels of consumer protection are
key goals for advertising regulation regardless of the media in
which the ad appears. However, we believe that advertising self-regulation
is best placed to deliver this.
Advertising self- and co-regulation within the
proposed Directive
2.3 The status of advertising self-regulation
within the proposed directive is the ASA's main concern: the proposed
text of the AMS Directive could severely inhibit the continued
operation and development of effective advertising self- and co-regulation
in the UK and across the EU-25.
2.4 The European Commission has repeatedly
expressed its intention to promote advertising self-regulation
as an effective consumer protection tool. Commissioner Reding
recently expressed her support for advertising self-regulation
during the Culture and Industry Committee on the review of the
TWF directive: "In all policies you need to give industry
a chance and there is only need to act if the industry shows that
it will not or cannot solve the problems... The advertising self-regulatory
authorities have reached good results and have done good preparatory
work so they deserve to be trusted". In addition, the Explanatory
Memorandum[2]
that accompanied the publication of the proposed Directive stated
that the Directive explicitly referred to co- and self-regulation,
suggesting that Member States would be able to employ flexible
regulatory tools to achieve the Directive's aims.
2.5 Despite this apparent support for self-regulation,
a specific reference to self-regulation has been omitted from
Article 3 of the proposed AMS Directive, leaving only a reference
to co-regulation and an instruction in the recitals to use the
Inter Institutional Agreement (IIA) on Better Law Making. The
effect of this wording appears to be to prohibit the use of self-regulation
and to permit only a very narrow form of co-regulation.
Why is the wording problematic?
2.6 The IIA's prescriptive definition of
co-regulation does not recognise that there is no "one size
fits all" approach to regulation. The reality is that differing
legal traditions in each Member State have allowed very different
models of advertising self-regulation to be developed across the
EU-25.
2.7 For example, although the ASA system
is not compliant with the IIA definitions of either self-regulation
or co-regulation, the ASA is still widely recognised as a highly
successful and best practice regulators. Given that the ASA is
operating very effectively and is well-linked in to partner statutory
regulators, to require changes of it would be nonsensical and
a discredit to European legislators.
2.8 The inclusion of a direction to use
the IIA is at odds with Article 249 of the Treaty establishing
the European Community, which states that a directive "shall
be binding, as to the result to be achieved, upon each Member
State to which it is addressed, but shall leave to the national
authorities the choice of form and methods". This principle
was exemplified when Ofcom contracted-out broadcast advertising
to the ASA system: the UK is still achieving effective implementation
of the TWF Directive, even though the ASA's structures do not
comply with the IIA.
2.9 Of particular concern is that the IIA
definition of co-regulation essentially restricts industry participation
to funding the regulatory system, but without providing sufficient
motivation for doing so. It ignores the positive impact of practitioner
recognition and support for "their" system.
2.10 The lack of flexibility in the proposed
wording means that this Directive could force the ASA to restructure
into an organisation in which the industry patently would not
want to invest. Let there be no mistake about it: the proposed
text puts the ASA at great risk. Losing the benefits of a "one-stop
shop" might ultimately decrease the level of consumer protection
in the UK.
2.11 Although not explicitly required by
the Directive, it seems likely that Ofcom would introduce licensing
for new media providers that fall within the scope of the Directive.
The effect of this would be to shift a large amount of non-broadcast
advertising from the self-regulatory part of the ASA system into
co-regulation. As new media is a major growth area in non-broadcast
advertising, this could, in the long term, have a destablishing
effect on the seIf-regulatory system.
Why use self- and co-regulation in New Media?
2.12 The ASA firmly believes that laws are
there to be enforced. They are not enacted to be mere statements
of good practice. where a law cannot be effectively enforced it
brings both the law in general and those attempting to enforce
it into disrepute.
2.13 This point is particularly pertinent
in relation to the AMS Directive; the Directive will attempt to
regulate a rapidly changing industry that operates in media without
any global borders. Pursuing this aim through statutory enforcement
seems destined for failure. Any Directive that might encourage
businesses to move outside the EU25 to avoid regulation, whilst
still allowing those businesses to target EU consumers is unsatisfactory.
This, in itself, provides a strong case for allowing flexible
self-regulatory mechanisms to tackle the challenge instead.
2.14 It is for policy makers to decide how
policy aims can best be secured, but passing rigid laws, hiring
more officials, and pursuing cases through the courts might not
be the best way. Flexible but effective self-regulation would
appear to be the most sensible and useful approach in an industry
that is changing rapidly and when jurisdiction is difficult to
establish.
2.15 Self-regulation can respond more quickly
and appropriately to changes in fast-moving technology in respect
of advertising regulation and a "one-stop shop" is able
to act on advertising content regardless of "linear"/"non-linear"
distinction.
2.16 The Codes cover all advertisements
in paid-for space (including internet pop-ups and banner ads and
text messages) with a few notable exceptions eg on pack claims,
in-store promotions, election advertising, classified ads and
sponsorship.
2.17 Finally, the CAP Code already covers
advertising that falls within the scope of the proposed AMS Directive
and the industry is aware of need to extend the structure of the
UK system to include formal representation of new media stakeholders
in its Committees and has been working on this challenge independently
and ahead of this proposal from the European Commission.
If you have any queries or questions about any
aspect of this submission or the work of the ASA, please do not
hesitate to contact me.
2 October 2006
Annex 1
Introducing a New One-Stop Shop for Advertising
Complaints
BACKGROUND
On 1 November 2004 the biggest change in the
regulation of advertising for over 40 years took place. The introduction
of a one-stop shop for all advertising complaints makes it simpler
and more straightforward for consumers to complain about advertisements
they find misleading or offensive.
Since 1962 the Advertising Standards Authority
(ASA) has controlled the self-regulation of non-broadcast advertising,
including print, posters, direct mail, sales promotions and some
Internet ads. But the ASA has never been responsible for TV and
radio commercials. Instead, the Independent Television Commission,
the Radio Authority, and most recently, Ofcom have been the statutory
regulators for broadcast advertising.
Following a public consultation in 2004, Parliament
approved Ofcom's proposals under the Communications Act 2003 to
contract out responsibility for the regulation of broadcast advertising
to the ASA. Working with the advertising industry and Ofcom, the
ASA developed a One-stop shop for all advertising complaints that
launched on 1 November 2004.
In the first 10 months of 2004 to 1 November,
the ASA had to turn away around 6,000 people who tried to complain
about a broadcast advertisement. The one-stop shop ended this
confusion, with all ad complaints received and resolved by the
ASA. The ASA accepts complaints online, by post or by phone.
TWO SYSTEMS
WITHIN A
ONE-STOP
SHOP
Designed to be simple for consumers to access,
behind the scenes the one-stop shop operates two parallel systems
for regulating broadcast and non-broadcast advertising. This is
because the ASA's contract with Ofcom differs from the existing
arrangements for regulating non-broadcast advertising.
The ASA is accountable to Ofcom for its effectiveness
in regulating broadcast advertising and is able to refer any broadcaster
who does not co-operate to Ofcom for further action. However,
Ofcom's remit does not extend to non-broadcast advertising. Here,
the Office of Fair Trading continues to provide a legal backstop
for advertisers who refuse to comply with ASA adjudications on
misleading ads. Although consumers just see a single ASA, two
systems operate alongside each other, with separate funding streams,
and specialist teams of staff assessing complaints according to
the relevant Codes.
Adjudications are made by the ASA Council. Some
Council members judge only broadcast complaints while others focus
on non-broadcast advertising. Most Council members are lay people,
but one-third has experience of the advertising industry. The
Council's Chairman is Lord Borrie, QC. Its decisions are published
on the ASA's website every Wednesday—www.asa.org.uk
THE ADVERTISING
CODES
The establishment of the one-stop shop meant
that Ofcom handed over responsibility for maintaining standards
in broadcast advertising content to the advertising industry.
A new body—the Broadcast Committee of Advertising Practice
(BCAP)—has taken charge of setting, reviewing and revising
the broadcast advertising Codes. The Advertising Advisory Committee
(AAC)—a new independent committee of lay people—advises
BCAP. Any changes to the Codes proposed by BCAP must be agreed
by Ofcom. Ofcom is also able to insist on changes to the Codes,
although it would not normally seek to do this.
TV and radio ads still have to be pre-cleared
before they can go on air. The pre-clearance bodies—the
BACC and the RACC—operate independently of BCAP.
The Code for non-broadcast advertising (The
British Code of Advertising, Sales Promotion and Direct Marketing
or the CAP Code) continues to be managed and enforced by the advertising
industry via the Committee of Advertising Practice—the body
that has been responsible for advertising standards in non-broadcast
media for over 40 years. Ofcom's remit does not extend to the
CAP Code.
FUNDING
The ASA is funded by the advertising industry
via the Advertising Standards Board of Finance (ASBOF). ASBOF
collects a levy on display advertising and direct mail expenditure
from advertisers and passes it on to the ASA. ASBOF's role means
the ASA never knows how much an individual advertiser contributes—helping
to preserve the ASA's independence.
Under the new one-stop shop, this income stream
is supplemented by a similar levy on broadcast airtime. The broadcast
levy is collected by BASBOF—the Broadcast Advertising Standards
Board of Finance. Although the two levies both fund the one-stop
shop, the two income streams are managed separately.
1 Established in 1992, EASA (www.easa-alliance.orq.uk)
is an association of EU self-regulatory organisations and European
industry associations, represening advertisers, agencies and media.
One of its first actions was to establish a credible system for
handling cross border complaints about advertising. Back
2
Paragraphs 331, 341 and 342 of the Explanatory Memorandum (http://europa.eu.int/eur-lex/lex/lexUriServ/LexUriServ.do?uri=
CELEX:52005PC0646:EN:NOT) Back
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