This article aims to progress the discussion about the accountability and regulation of the ASA, and proposes how your clients and their trading associations and professional organisations might pursue a strategy to achieve necessary reforms at the ASA. This is of crucial importance to those of your business clients who engage in advertising, including where this involves the use of a website. To help you to access links to documentation referred to in Part 1 of this article (see above), the endnotes to the previous article have been set out in the box on page 27.
During the author’s research for this article, he received information from the Competition and Markets Authority (CMA) about its working relationship with the ASA, and referred to the Consumer protection: guidance on the CMA’s approach to use of its consumer powers (‘ the Guidance’ ).1 He enquired about the role of the ASA in the Consumer Concurrencies Group (CCG) to which the CMA replied as follows (paragraphs 4.15 to 4.17 of the Guidance): ‘The [CCG]: The cases undertaken by the ASA are not the subject of the clarifying and best practice discussions by the CCG referred to in the Guidance on the CMA’s approach to use of its consumer powers.’
This suggests that although the ASA is a member of the CCG for the purpose of supporting concurrent regulation, and although the CCG discusses clarifying and best practice, the ASA itself is not required by the Guidance to apply such regulation and clarity and best practice when investigating and adjudicating on its own cases when dealing with advertising complaints.
The CMA further states: The ASA is not a regulator for the purposes of the Regulators Code and therefore is not subject to its principles, and that speciÿc transparency principles are a CMA commitment rather than a commitment of the ASA. Does this general lack of accountability accord with the aims of the principles set out in paragraphs 4.28 to 4.38 of the Guidance, to which the ASA is subject as ‘established means’? Should the CMA investigate and resolve this apparent conflict before referring a case to the ASA, and should the CMA intervene in any case that it has referred?
The author hopes that this article is construed to be the first step in a strategy to bring up to date the regulation and accountability of the ASA
The CMA further states that: Directive 2006/114/EC [ie, Directive 2006/114/EC of the European Parliament and of the Council of 12 December 2006 concerning misleading and comparative advertising]: The Business Protection from Misleading Marketing Regulations 2008 (BPRs) [SI No 1276] implement the Directive 2006/114/ EC. A breach of the BPRs can be enforced by the local authority Trading Standards Services (TSS), the CMA and the Department of Enterprise Trade and Investment in Northern Ireland (DETINI). The TSS and DETINI have a duty to enforce the BPRs and the CMA has a power to do so.
In a House of Lords’ debate about the performance of the ASA, Lord Palmer said:
[T]he EU Directive … requires the UK to provide, ‘effective means ... to combat misleading advertising, ’ with recourse to the courts … the ASA is not a court.’2
In his contribution to a House of Lords’ debate on the ASA, Lord Stevenson said:
… can we be absolutely certain that the current arrangements satisfy the EU directive in its full sense? Enough has been said to raise a question for me about whether their particularity is sufficient to do it. I am particularly struck by the points made about access to the courts should there be a problem in resolving disputes. Of course there is an independent adjudicator and judicial review, but I do not think that that is what the EU directive meant.’3
Also in that debate, Baroness Deech said: ‘The ASA structure may mean that the UK is in breach of European Union Directive 114 of 2006, which requires recourse to a court or administrative tribunal as a remedy.’4
So, is the ASA in breach of EU Directive 2006/114/EC and not complying with paragraphs 4.34 and 4.35 of the Guidance or, in general, with the principles set out in paragraphs 4.28 to 4.38 of the Guidance? Again, should the CMA exercise its discretion to investigate and resolve this possible conflict before it refers a case to the ASA, and should it intervene in any case that it has referred?
The CMA states that: Public authorities do not have the power to discipline the ASA, and since it is not a public regulator it is not subject to the Legislative and Regulatory Reform Act 2006 and the Regulators Code made under that Act. The CMA does not make legislation, and any questions you may have about the UK’s consumer and regulatory landscape are best pursued with the Department for Business, Innovation and Skills, and also that: … the ASA is a private self-regulatory agency set up and funded by the advertising industry. It is not a part of government or the wider public sector, has no statutory powers in its own right, and performs a public enforcement role only to the extent that it has contracted with Ofcom to do so in the broadcast advertising sector. The ASA acts under contract for Ofcom in line with a memorandum of understanding.
The Department for Business, Innovation and Skills should initiate legislation properly to regulate the ASA, and Ofcom should be asked to review the contractual provisions and the probity of its memorandum of understanding with the ASA. Conclusion The ASA suffers from all those defects: the control of the funders over appointment and setting standards. The ASA is not a government agency, not elected, and not overseen. It is funded by the advertising industry through the levy collected by the Advertising Standards Board of Finance (ASBOF). The chair of the ASA is appointed by ASBOF. The council members appear to be appointed by the chair alone, and the fact that the majority are not connected with the advertising industry does not make the ASA independent in the regulatory sense. The codes of practice are written by an industry committee, the Committee of Advertising Practice – CAP – which shares an executive with the ASA.
Therefore the code-writing , administration, appointments and funding are entirely in the hands of the advertising industry. There is no external input at all, save for the very tiny consumer input, the Advertising Advisory Committee, which gives advice only to the Broadcasting Committee of Advertising Practice, and can be ignored after the advice is received. The chair and council members of the ASA double up as the company directors of the ASA with ‘oversight. ’ The ASA is not subject to freedom of information requests. Three industry panels advise the CAP and the ASA. It is not accountable to anyone outside the industry - indeed, it is hermetically sealed.
…The time has come, after 50 years of lagging behind best practice in regulation, to bring the ASA into the 21st century.5
The above indicates that the ASA does not have an ‘appropriate degree of independence in governance’ (paragraph 4.35 of the Guidance). The concerns of Baroness Deech must be the concerns of all businesses likely to be targeted by the ASA. Their trading associations and professional organisations need to combine to form a united front, not only to assist those of their members that have dealings with the ASA, but also to act as a pressure group for change at the ASA. The author hopes that this article is construed to be the first step in a strategy to bring up to date the regulation and accountability of the ASA.
1 Available here
2 See Hansard, HL Debate col 1805, 29 June 2015
3 See Hansard, HL Debate cols 1389–1390 , 29 October 2015
4 See Hansard, HL Debate col 1378, 29 October 2015
5 See Hansard, HL Debate cols 1377–1379 , 29 October 2015, speech by Baroness Deech