Worth its weight in gold? ASA investigations into dodgy investments continue.

A week after publishing a series of rulings on unregulated investment in wine (discussed by Brinsley Dresden here), the Advertising Standards Authority (ASA) released five upheld decisions forming part of its investigation into gold investment.

It is not surprising that an established symbol of wealth and success may appeal to consumers. In stories we read as children, pirates hunt for gold treasure; every four years, athletes strive for the gold medal at the Olympic games; and as Meryl Streep reads her acceptance speech for her eighth* best actress award, she clutches a golden statue.

However, budding investors hoping for a goldrush may be short-changed. With a finite supply of gold, the demand can vary hugely, and the value is therefore volatile. And in the current geo-political climate, demand is strong. As such, the gold investment market is not regulated within the UK, nor is it protected by the Financial Services Compensation Scheme or the Financial Ombudsman Service.

In their investigation, the ASA considered radio ads, press ads, and a paid-for Facebook ad. While the radio ads were in breach of the BCAP code (they appeared on LBC rather than a specialised financial radio station), the others were found to be misleading as they: 

• failed to illustrate the risks of the investments; and
• did not make clear that past performance did not necessarily give a guide for the future.

Any ads concerning investments must comply within both ASA and Financial Conduct Authority (FCA) guidelines and must make it clear (a) whether the investment is regulated and (b) that the value of investments will vary.

Perhaps another element to consider, which the ASA did not reference in their rulings, is the irresponsible nature of this type of advertising. With many struggling in an uncertain economy, individuals may be swayed to make hasty financial decisions – especially when they believe they are investing in something which has long been held as a ‘traditional’ sign of value, rather than newer (and somewhat more complex) cryptoassets. 

Cryptoassets and regulation

Cryptoassets remain an area of concern for regulators. In 2021, the ASA made it clear that the monitoring of cryptoassets was a “red-alert priority”, and in October 2023, this responsibility was handed over to the FCA. 

However, the ASA still addresses he non-technical aspects of ads for financial, such as social responsibility, offence, superiority claims, or other claims that don’t relate to the actual product being promoted.  Just a couple of months ago, the BCAP Code was updated to introduce new rules restricting broadcast ads for qualifying cryptoassets. 

Despite the continued efforts to protect consumers, the ASA and FCA may be battling a fierce opponent: the celebrity.

Celebrity influence

In 2022, Kim Kardashian faced a £1.12m fine for advertising a cryptocurrency on her Instagram without disclosing she’d been paid to do so. She also agreed not to promote crypto asset securities for three years – with this deadline expiring next year. 

While she is out of action, the likes of Logan Paul – the controversial YouTuber / boxer / entrepreneur – have taken to promoting investments. Already facing a multi-million-dollar lawsuit over a failed NFT project, ‘CryptoZoo’, Paul is now accused of misleading fans by failing to reveal his financial interest in ‘meme coins’ and other cryptocurrencies.

Although Kardashian and Paul are based in the US and fall outside the ASA’s remit, their reach is significant – any many of their fans will be young and inexperienced investors. With Ofcom reporting that 96% of children aged 3 to 17 watch videos on apps and video sharing sites, perhaps the next key step is to develop financial education, as well as financial regulation. 

And what is the most important lesson to learn when it comes to your financial education? All that glistens is not gold.

*At the time of publication – but in our opinion, it should be at least nine for her performance as Miranda Priestly.