Funding Circle has been rapped by the advertising regulator for a television advert that did not make clear that a personal guarantee might be required for some loans.
The Advertising Standards Authority (ASA) said it had upheld one complaint from a viewer regarding an advert broadcast on 3 March 2019.
It featured a voice-over that stated, “Join the thousands of businesses who’ve taken out a Funding Circle loan with rates from 1.9 per cent per year.”
On-screen text stated “rates from 1.9 per cent per year.”
One complainant, who understood that a personal guarantee was required to take out a loan, challenged whether the ad was misleading for not stating that information.
The ASA investigated and Funding Circle argued that it offered loans of various sizes, on a secured and non-secured basis, each with different lending criteria and conditions to be satisfied so it was not possible to describe all material terms in a 30-second ad.
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“They believed it was standard market practice to require similar forms of personal guarantee in relation to certain loans and did not believe potential clients would be surprised by it,” the ruling, published today (15 April), said.
The ASA rejected Funding Circle’s argument and upheld the complaint, ordering that it the ad is not broadcast again in the same way and should in the future include information likely to be considered material to applicants, for example if a personal guarantee might be required.
“The ASA acknowledged that applicants might be aware that a personal guarantee may be necessary for some business loans,” the ASA said.
“However, we disagreed with Funding Circle that it was not necessary to flag it in the ad as a possibility to applicants.
“If the company was a limited company, for example, applicants might not expect to be personally liable.
“We considered the possibility that a personal guarantee would be required in a business loan was material information that needed to be stated in an ad.
“Because it was not, we concluded that the ad was likely to mislead.”