25 April 2012 / Money

Why we challenged Stanley Gibbons’ stamp investment advert

Comments 30

Are you interested in investing in stamps? Would an offer of ‘guaranteed’ 100% protection of your investment convince you to part with the cash? We were fearful it would so issued a complaint to the ASA.

Adverts for investments are often littered with words such as ‘secure’, ‘guaranteed’ and ‘capital protected’, but can you actually rely on these promises?

When we saw an advert for the Stanley Gibbons ‘Capital Protected Growth Plan’, which claimed to be ‘designed to protect your investment 100% while at the same time allowing unlimited growth’, alarm bells rang at Which? headquarters.

The advert was marketing an investment in stamps which it said offered a ‘100 year history of strong and steady increases’. The company claimed that ‘our confidence in its performance allows us to offer you a full capital security guarantee – we will guarantee the sum you choose to invest with us, whatever happens to the value of your portfolio.’

Risk of losing money

We put in a complaint to the Advertising Standards Authority (ASA). The investment was unregulated and not covered by the Financial Services Compensation Scheme. If the company was unable to fulfil its promise then consumers could be at risk of losing money.

Stanley Gibbons said that the guarantee was secured by a ‘legal contract’ but was not ‘guaranteed or underwritten by any third party’.

The ASA considered that the small print in the advert meant that ‘it would be clear to readers that any investment with Stanley Gibbons was underwritten by them alone and was dependent upon their continuing solvency.’

ASA dismiss guarantees complaint

As a result, the ASA did not uphold part of our complaint. However, it did say that Stanley Gibbons should not claim that their stamps had a 100-year history of strong and steady increases.

We’re disappointed with the ASA decision. We think a ‘100%’ guarantee will be understood by most to mean just that.

Investors typically have the additional security of third party guarantees and the back-up of the Financial Services Compensation Scheme. We’re not convinced consumers will always consider the solvency risk of the provider. Even if they do, it will be impossible for consumers to always be able to tell the good from the bad.

Bold promises

While nothing is truly 100% guaranteed, consumers are more at risk without the additional protection of a third-party guarantee.

Where this is the case, consumers should be told clearly and we do not think statements in the small print go far enough.

Stanley Gibbons still have documents on their website which claim that the product offers a ‘cast iron guarantee for your capital’ and that ‘you certainly can’t lose a penny’ – claims which we’re concerned may still mislead some investors, particularly as the investments are not guaranteed or underwritten by any third party.

A ‘guaranteed’ investment is a big promise and sounds like a sure win. Do you feel confident being able to judge for yourself whether a company was able to meet any ‘guarantee’ and feel happy to part with your cash?

Comments

John Ward says:

25 April 2012

If this is such a sure-fire winner of an investment opportunity, why are the shareholders, directors and executives of Stanley Gibbons not keeping it to themselves? I think in this case their need for some new capital exceeds my desire for an illiquid portfolio of postage stamps [which might or might not be worth the paper they are printed on]. Premium Bonds have the same guarantee and [a] it is credible, [b] it is secured by HMTreasury, [c] they are easily cashed, and [d] they are fun. Reading between the perforations I can see an investment in stamps coming unstuck.

Mike English says:

12 September 2019

My mother invested 20 thousand pounds with premium bonds who are based in Scotland for some God forsaken reason. Mother managed to win a few times and the amount she was winning was being reduced until it was obvious they did not approve of their customers earning enough to offset the depreciation of our ever weakening currency.
To add insult to injury they won’t pay up if you do not claim the miserable winnings before a certain time which I think is 12 weeks.
Mike English N.London

alfa says:

12 September 2019

You can set up your NS&I account to get winnings paid straight into your bank account then you don’t have to worry about claiming in time.

malcolm r says:

12 September 2019

Worth checking on their website.
“Do I have any unclaimed prizes?
How to find out?
We contact everyone when they win a prize but sometimes the good news doesn’t arrive. This might be because you’ve moved and not told us, you’ve changed some of your other personal details, or our letter went astray.

Don’t worry though. We’ll hold on to your prize until you get in touch with us. And there’s no time limit for claims.”

They currently pay out prizes to the equivalent of 1.4% and it is tax free. Compares well with many savings accounts.

rarrar says:

25 April 2012

Given the specialist nature of this investment I agree with the ASA.
Investors and the public need to take some responsibility themselves to check out and understand any investment they buy.

One could argue that firms shouldnt be allowed to offer guarantees on their products unless they arrange 3rd party insurance in case they go into administration, or offer gift vouchers which again become worthless if the shop goes into administration.

John Ward says:

25 April 2012

Fair point rarrar. Most product warranties are unsecured. Many extended guarantees are provided by a third party [e.g Domestic & General] which presumably charges the retailer a fee in respect of each guarantee sold; after admin costs this money is presumably kept on deposit in order to meet liabilities and claims. But how do we know whether it is underwritten securely?
While I agree that the Stanley Gibbons investment is specialist, fairly sophisticated, and probably only of interest to a certain clientele, the marketing of it is clearly aiming at a broad appeal. People will clutch at anything that claims to be risk free, especially when every other opportunity is either deficient or dodgy – and that is not just gullibility for which we might think there should be no protection, it is an outcome from deliberate marketing enticement. Whereas I think the ASA adjudication was technically correct, I also firmly believe there should be better regulation and consumer protection in this area and that Which? is right to press for it. A domestic appliance warranty is not in the same league as a serious financial investment and all advertising or promotion should be entirely truthful and completely ethical. If what Stanley Gibbons aremeans is “because of our history and reputation, and the track record of stamps as an investment, we don’t need to, and do not intend to, underwrite our guarantee”, why don’t they just say so in so many words? Their underlying asset might well be specie but it’s not absolutely immune from loss or depreciation.

richard says:

26 April 2012

A little story – Years ago I collected stamps enthusiastically and seriously – I had a wide-ranging collection in an old yellowing leather bound stamp book – and took it to the Stanley Gibbons shop in London. I was offered £200 (possibly over £2000 now) which to me at the time was very rewarding – so I agreed the sale. I handed over the book – the assistant removed all the stamps and gave them back – It was just the book that was worth £200! – Apparently it was a very rare 19th century publication in superb condition! I gave up collecting stamps :).

M. says:

26 April 2012

I have been collecting stamps for nigh on 50 years, my response to Stanley Gibbons offer: Total hogwash!
Especially as the offer is not guaranteed, I wonder how the ASA justify their decision, that a company is promising an iron clad guarantee with no means of enforcing it
Value increase & decrease along with the market, new discoveries of more previously rare stamps, and the willingness of investors and just what is currently in vogue.

As an old hand I know my round the philatelic world, and know how fingers can be burnt. I think it is wrong for an old reputable company such as Stanley Gibbons to make these claims, clearly tempting amateurs to invest with them on the basis of unkeepable promises, unless they agree to purchase back everyone’s portfolio when the market drops, but then that would make them insolvent!
To all, my stamp portfolio has gone down as well as up during the past few decades.

This makes distressing reading:
The ASA considered that the small print in the advert meant that ‘it would be clear to readers that any investment with Stanley Gibbons was underwritten by them alone and was dependent upon their continuing solvency.’

After all the discourse we have had about small print vs clarity? What is the point of the ASA if not to protect us from the hidden small print clauses?
I wonder which wonder kid thought this one up

Frustrated & Disappointed says:

3 June 2014

In case anyone is still reading this article they may be interested to know that we invested in an SG guaranteed investment which matured nearly two months ago but they haven’t yet paid us the maturity proceeds. We’ve filled in all the forms, provided the proof of ID they wanted and chased by e-mail and phone but still nothing. We just get fobbed-off that they are speaking with their accounts department to get the payment made as soon as possible. Perhaps they really have given guarantees that they can’t fulfil. With no protection from the FCA we’re considering taking legal action if they don’t pay up soon. Very disappointed that they aren’t living up to the grand reputation they place so much stock by and obviously won’t be dealing with SG again in the future.

Frustrated & Disappointed says:

15 June 2014

Made another call to SG and got through to the top person in their investment division. Apologised for delay in returning our funds and promised they would be paid in the next few days. To her credit, the money was in our bank account three days later. So all sorted now.

Keith Williams says:

25 July 2014

I used to work for Stanley Gibbons Auctions (1967-72) so it was before a major price crash.
History is about to repeat itself.
There are very few new collectors coming into the market, and these prices are being hyped to sell to people who do not understand. This hobby will go the same was as matchbox labels, bus tickets and cigarette cards. The crash WILL come, but l cannot tell you when

Keith Williams says:

25 July 2014

Also remember that as an UNREGULATED INVESTMENT, the regulators cannot help you and there will be no compensation from them.

Nigel Goldman says:

17 October 2015

In the 1990’s I ran a company which promoted investment in rare top end certified coins. We sold many millions of pounds worth of coins. However, with a (then) flat market and the mark up we had to charge to cover advertising, salesmen’s commissions, VAT etc we were unable to maintain a liquid market and make redemptions to our investors on time without fresh blood coming in to buy. Stanley Gibbons will find themselves in an identical situation , it is only a matter of when. My company got prosecuted for making false promises and I was sent to prison. How I would like to have those coins to deal with now! Their value has soared, and certification has proved to be extremely popular just as I envisaged. I was right, long term. Stanley Gibbons may well be right that LONG TERM their stamps will go up in value, but in my experience any company offering a guarantee in an investment in this nature fail, and investors get left empty handed. Given the enormous sums being spent by SG in advertising this investment I wonder how they can even offer any guarantees? This could be a classic ponzi scheme. Also their guarantee of a profit relates to the catalogue value of the stamps you purchase, not their resale value. And no guesses as to who publishes the catalogue? Yes, Stanley Gibbons, of course. Maybe this is why Ian Goldbart has resigned from the board before the shit hits the fan. The SG share price traded below £1 yesterday. I would stay shore all the way down to 25p personally. Probably a better wager than buying the stamps!

Nigel Goldman says:

17 October 2015

I mean stay short!

wavechange says:

17 October 2015

Maybe it’s best to treat stamp collecting simply as an enjoyable hobby suitable for all ages. I am not a stamp collector but have enjoyed looking at collections, large and small. If you collect stamps as a hobby you don’t need to worry about what they are worth.

alfa says:

17 October 2015

Very true. I still have my stamp collection somewhere that I collected as a child and have no idea if it is worth anything or not. Although less paper is better for the environment, it is a shame stamps are not in use the way they used to be and children are no longer encouraged to collect them. I learned a lot about countries of the world through stamp collecting.

John Ward says:

17 October 2015

You don’t even get to see the stamps with this particular ‘investment’. As I said previously, they are just specie that is not immune from fluctuations in values any more than gold bullion is, and indeed much more volatile than that.

wavechange says:

17 October 2015

I remember spreading out a large Daily Telegraph map and my father explaining where the stamps in his album had come from. A geography lesson, with a bit of history thrown in since the names of some countries had changed.

John Ward says:

17 October 2015

I still have my albums from childhood. They don’t take up much space and offer exciting prospects of a holiday in the fabulous landscapes of Nyasaland one day.

Nigel Goldman says:

27 December 2016

At the time of writing the Stanley Gibbons share price has fallen to 12p!

User 66219 says:

27 December 2016

This comment was removed at the request of the user

John Ward says:

27 December 2016

The slump in the Stanley Gibbons share price demonstrates that potential investors in the company [not in the specific ‘Capital Protected Growth Plan’] consider that the risks outweigh the rewards and one of those risks must be a redemption call on the Growth Plan. In itself that risk is directly linked to the market value of postage stamps.

The company shares must now be virtually worthless [since the selling price will probably be well below 12p each]. Without knowing how many growth plan investors there were and how many are still left it is impossible to estimate the actual stability of the company, and in any case the company has many other assets, but the stock market has an eye for trouble ahead. It is possible that Growth Plan investors will get their capital back in due course but the ‘guarantee’ is looking increasingly tenuous as it is standing on shifting sand.

I don’t have the same concern for stock market investors – Stanley Gibbons is a niche investment and would appeal only to a particular and informed market who would be aware of the risks.

Archie Dean says:

4 January 2017

I do hope you took your own advice to go ‘short’ on SG !!

John Ward says:

4 January 2017

There are three different forms of speculation being discussed here –
1. dealing directly in postage stamps.
2. holding shares in a company that deals in postage stamps.
3. investing in a ‘capital protected growth plan’ based on the fortunes of a company that deals in postage stamps.

The first requires a lot of philatelic knowledge and experience to yield a good financial return but might be personally satisfying and enjoyable. The second does not require so much specific philatelic knowledge but has risks dependent on the first type so a knowledge of the stamps market is useful. The third is dependent on the risks in both the first and second forms; whether the capital repayment guarantee is rock solid depends on how the fund is invested and managed and whether it is secured against good assets – experienced philatelists will no doubt take a more favourable view of stamps [or the trade in stamps] as an asset than I would; even if all the capital is returned there might be no appreciation but possibly a devaluation in the investment.

At the end of the day all these investments are based on the continued willingness of existing collectors to add to their collections and for new collectors to enter the market and both these factors depend on global economics; at a time of uncertainty and volatility it is considered that rare and precious artifacts are more highly sought-after, but against that should be factored the greater risk of enforced liquidations with a consequent decline in values.

Patrick Taylor says:

27 December 2016

It is a shame that the CAwiki does not exist to have this article and the valuable comments at a readily accessible point for all subscribers.

The ASA might be asked for a comment : )

Steve says:

1 May 2017

My father collected stamps all his life. He took his treasured collection to a stamp dealer and was told that he would have been better off using the stamps as postage while they still had value. The dealer was not interested in purchasing a single stamp. The first day covers are worthless. You have to question how people were duped so easily. If anyone wants to prove me wrong, and tell me that these little bits of paper are actually are worth something, then you are more than welcome to view the stamps.

Glen Head says:

7 November 2017

Your article dated 25/04/2012. Web address https://conversation.which.co.uk/money/stanley-gibbons-stamp-asa-complaint-investment-guarantee/

With regards to the subject on guarantees with Stanley Gibbons. I have just had my fixed term mature under this agreement and Stanley Gibbons have failed to pay me £13,000. I have approached the people involved and also the accounts department, from which I get no reply. I am taking action to reclaim this amount as no person from the company has got back to me. If anyone is thinking about investing under this scheme, then please think again. Like myself, you are unlikely to be paid out at the end. You may like to warn your subscribers also.