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.
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?