Advertising Standards Authority — Question for Short Debate

– in the House of Lords at 5:54 pm on 29 October 2015.

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Photo of Baroness Deech Baroness Deech Chair, Equality Act 2010 and Disability Committee, Chair, Equality Act 2010 and Disability Committee 5:54, 29 October 2015

To ask Her Majesty’s Government what plans they have to review the governance of the Advertising Standards Authority.

Photo of Baroness Deech Baroness Deech Chair, Equality Act 2010 and Disability Committee, Chair, Equality Act 2010 and Disability Committee

My Lords, I have two interests to declare. The first is as a former claimant, partly successful, to the ASA—an event that triggered my interest in its nature and procedures. The second is as a regulator myself of many years’ standing. I have regulated the BBC, IVF, student complaints and barristers; indeed, if it moves and needs regulation, I seem to get the job. I have immersed myself in what is good regulation and what is not, and this afternoon’s topic is accordingly part of a wider debate about successful modern regulation. I am entirely consistent on this topic; for years I have called for the BBC—specifically, its complaints system, which deals with topics that go to the heart of the reputation of the BBC—to be dealt with by an independent body and not by three trustees closeted with their editorial adviser at the top of a labyrinthine process.

The era of self-regulation is almost over. No doubt some speakers in this debate will tell us, quite properly, that the ASA’s rulings are good and that it has been a success for decades. That may be one view, but what matters today is perception and the distancing of vested interests from the profession or industry that is being regulated. The public demand no less. The Shipman inquiry brought about a sea change in medical regulation; the Clementi review ended the legal profession’s self-regulation; the Etherington report will lead to the end of fundraising self-regulation. The press, the BBC to some extent, and the ASA are the remaining self-regulators in that most important area of our life— information—and we have seen what vested interests are doing to attempts to reform the mode of press regulation.

Sir Brian Leveson analysed the insufficiencies of self-regulation in his report on the press. 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. Successful judicial review is very difficult, as it is directed only to the lawfulness of the ultimate review by the independent reviewer—one person—and in general cannot look at the reasonableness of the ASA decision itself.

For these structural reasons the ASA does not qualify to be a full member of the Ombudsman Association, which, like Leveson, requires members to be independent of those whom they investigate and that they have a minimum term of appointment of five years so that they are not under pressure when it comes to the question of renewal; ASA members have a three-year renewable term with a salary sufficiently generous to make a second term attractive. The Ombudsman Association requires that remuneration and employment should not be capable of being adversely affected by those who are the subject of regulation, that it should be accountable to an outside body, and should act according to the principles of natural justice, most notably showing all the material to both sides, which the ASA does not.

To reinforce its position, the ASA is a member of the European Advertising Standards Alliance, which openly promotes self-regulation and is chaired by none other than the CEO of the ASA. 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.

Does this matter? I will give an example. Right now there is intense interest in obesity and sugar, and already it is being suggested that there can be no credibility in the ASA’s rulings about sweet stuffs and junk food since it is perceived to be in the hands of the advertisers.

That necessary trust cannot be established without radical reform of the self-regulatory model. That is more important than ever before because of the widespread nature of new technology, bringing ads into and over an ever-increasing spectrum and making them particularly unavoidable by children.

If the ASA observed the rules of natural justice and gave adequate reasons, and treated both sides equally, there might be trust, but more often than not the reasoning of the rulings are guesswork and subjective. As I will show, there is a lack of consistency in judgments. Some take an impressionistic line; others are more objective with scientific input, but only a handful of experts are listed on the ASA’s website and there are no guidelines on whether an expert is going to be called in on the scientific or political matter under review.

Were they not fundamentally so illustrative of lack of reasoning, some of the ASA rulings on offensive material would be risible. Occasionally the ASA is in full Mary Whitehouse mode and objects to any ad which in its view suggests sexuality coupled with women in uniform—police, stewardesses or nurses. An ad is allowed to be “sexually suggestive” but not “overtly sexual”. Your Lordships and I may be out of touch with this sort of categorisation.

At other times the ASA is very relaxed about what members of the public see as pornographic pictures of naked women, and the rulings turn on the ASA’s view of which bits of the woman are on display—her facial expression, stance and gaze, or the position of the item she is holding to advertise. Holding a giant perfume bottle is deemed provocative, but not a wrench wielded by a woman, who was deemed to be only mildly sexual. A Ryanair cabin crew charity calendar ad at a time when undressed women in calendars were all the rage was deemed offensive because the women were wearing underwear and looking directly at the reader, but naked women with a look of defiance are okay. Never was consumer input more needed than in those types of rulings, together with some intelligent reasoning to dispel the notion of randomness. An ad calling on women to be beach-body ready, showing a model in a bikini, was okay, but an ad on a Polish-language website showing an ideal man’s body, with the suggestion that it could be swiftly achieved, was not. The mind boggles at the conversations that must have gone on in the ASA offices.

On questions of race, religion and politics, the ASA sometimes seems out of its depth. All of this could be made sense of with a consumer-led and non-industry-funded body that gave considered reasons for its rulings.

What is the ASA’s purpose? Is it to prevent misinformation being given to the public by scrutinising all claims objectively; is it to hold the balance between the complainants and the advertiser; or is it to protect the industry or the consumer? The time has come, after 50 years of lagging behind best practice in regulation, to bring the ASA into the 21st century. My suggestions draw heavily on the Leveson inquiry and other studies of good regulation.

This is what the ASA should do. The chair and board members should be appointed in a genuinely open and transparent, independent way without influence from the industry or government. The appointment panel for the chair, who should be independent of any political party, should follow Nolan principles and include, for example, the Commissioner for Public Appointments. Board members should be similarly appointed for one non-renewable term, and the funding settlement should be for long enough to reduce industry influence. The code drafting should include a majority of independent members. Twenty-first century governance requires a board with non-industry individuals to oversee the council. There should be an appeal system with more members and a wider remit. All the material should be shared with both sides and neither side should be allowed to spin out the proceedings by ignoring deadlines for response. There should also be clear guidelines about the use of experts.

If the ASA will not do that, one has to ask: why not? A statutory body is unlikely to be any more expensive or complicated but will be needed if self-regulation is not abandoned. We do not want red tape but regulation is still demanded where the welfare, rights and future of the public would be at risk without it. The rise of social media and the internet make it essential that there is a public and reasoned grip on advertising.

Photo of Lord Lipsey Lord Lipsey Labour 6:05, 29 October 2015

My Lords, this is a very welcome debate tabled by the noble Baroness, Lady Deech. In Britain, we spend much too much time denigrating the things that we do badly and too little time advertising the things that we do well. Advertising regulation, I shall argue this afternoon, is a jewel in our crown. Therefore, I welcome the opportunity to deal with some—unfortunately there is such a lot so I cannot deal with all of it—of the well-meaning, but in my view utterly misplaced, criticism of the Advertising Standards Authority and its governance, as advanced by the noble Baroness.

I, too, have been a regulator, but in this matter I am a gamekeeper turned poacher. I was a member of the council of the ASA for six years, first under my noble friend Lord Borrie and then under the noble Lord, Lord Smith. Since then, I have been a serial complainer against ads that seem to me to offend against the code. Indeed, I was told a while ago that I was in the top 10 complainers in Britain, and I expect to take the gold medal before too long.

This role of complainer gives me some sympathy with the noble Baroness. I reckon that I have a hit rate of about 90% with my complaints—that is not surprising, because I know from my experience on the council what is likely to win. However, it is a very bruising experience to lose, when the arguments against an ad which the complainer finds so compelling are rejected by the council in its wisdom. Therefore, I quite understand why the noble Baroness is injured still by the fate of her complaint against the ad concerning Medical Aid for Palestinians, given that only four of the 22 complaints she made were ultimately upheld. We know how deeply that must have bit, because as recently as 2012, in a lecture at Gresham College, the noble Baroness said that,

“the Advertising Standards Authority seems to work well as a self regulator”.

What has changed since then is on the record. Noble Lords know that they should not cross the noble Baroness lightly, and she has since mounted a sustained campaign against the governance of the ASA.

I understand that the noble Baroness has circulated to some noble Lords an 18-point charge sheet against the ASA. I expect that the noble Baroness, thoughtful as ever, did not send it to me because she did not want me to splutter into my cornflakes.

I do not have time to deal with all 18 points, but I focus instead on the points made by the noble Baroness when she asked a Parliamentary Question on the subject on 29 June this year, and which she repeated in her speech this afternoon. She said:

“There is no obligation to share material with both sides. The authority sometimes fails to seek expertise and evidence when necessary, fails to give adequate reasons for its judgments, fails to follow precedents”.—[Hansard, 29/6/15; col. 1804.]

I do not want to be unfair, but to me, there is a smell to those arguments: that of a lawyer trying to find lawyerly solutions to problems that she has perceived. The noble Baroness is taking a process that is designed for a lay person to use and seeking to turn it into a quasi-legal system. I shall explain why that seems to me to be a gross mistake.

Let me deal in turn with the points she made in the PQ. There is no obligation to share material. Instead, the ASA executive provides a concise summary of the points made by each side, checks with both sides before the matter goes to council that they do not feel misrepresented, and, often, corrects its summary. That way, one does not have to go through huge piles of papers to find out what the argument is about. That is not legality at work, but common sense.

The noble Baroness said that the authority fails to seek expertise. It does not; it gets it when it needs it. I was recently discussing with the ASA where it might appropriately get impartial advice on my special subject—racing tipsters’ advertising, on which, at some time, I will bore the House. But it rightly and deliberately does not do so when a lay person can perfectly well comprehend the arguments—something at which the ASA’s superb young staff is exceptionally skilled.

It is said that the ASA fails to give adequate reasons. Well, I know that it failed to convince the noble Baroness on her case, but as someone who has large numbers of these cases each year, I find its reasoning is adequate even when I disagree with it. Of course, if you do disagree, you can go off to the independent reviewer, Sir Hayden Phillips, who is a former civil servant of great distinction and judgment, complain about it and get it reconsidered if he is satisfied on the point you are making. Finally, it is said that it does not follow precedents. Well that is the real giveaway. Precedents, which are beloved of judges are often appropriate in law. But in the case of advertising, as I know from my time on the council, each case is different. The facts are different. One man’s misplaced monkey wrench on a lady is another woman’s disgraceful sexual invitation. These cases can be decided only on the facts. There cannot be a general rule on sexual representation that catches all of these things.

Of course, the noble Baroness disagrees with the judgments that are made. She said so. She would like more ads to be banned. She did not produce any evidence that the public feel the same way, and we will come to the public in a minute. I cannot think of a better way of deciding complaints than having 13 very serious people concentrating closely on the arguments, with the ads set out before them, considering them in the most succinct and objective way. I would certainly prefer that to leaving it to the noble Baroness to decide what we may or may not see.

Of course, the ASA observes the rule of law. On 20 occasions, advertisers, mostly commercial advertisers, no doubt egged on by their legal advisers who were looking forward to their fees, have sought judicial review. Of those, 18 of the 20 were wholly won by the ASA and one partly because judges, thank God, are people with common sense. I understand that the noble Baroness’s explanation is that judicial review does not go widely enough. Hey ho, here we go. That means more of the court’s time, more expensive lawyers, more angels dancing on the heads of pins all, so far as I can tell, to no possible practical gain.

One of the huge advantages of the present system is that it brings about a rough equality of armaments. As a complainant, I can pursue my complaint without worrying too much about the advertisers’ lawyers. If the changes sought by the noble Baroness were made, that would start to go. I am not sure that I could go on complaining because I could not face having to read through the vast chunks of material that she thinks should be made available. There are huge legal submissions, which is bureaucracy run amok, in order to consider what is often a very simple point. There would be more and more cases in which the big battalions with their deep pockets would get their way, to no benefit to the public.

Of all the things that the noble Baroness said, the thing that I most strongly disagree with is what she said about the public. What she identifies as the faults of the present system are in fact its strengths—informality, simplicity, a remedy open to all and not just to those who can bring money to bear and have great influence. That is why the Advertising Standards Authority has such strong public support. Some 75% of those who complain are either very or quite satisfied with the ASA, which is far higher than any other regulator with which it is compared.

I am genuinely sorry that the noble Baroness is among the 15% who are dissatisfied. Some time, I will share with her some of the experiences that I have had, too, when I have had complaints turned down. But there is an old saw that we should bear in mind: some people are never satisfied. No system will satisfy everyone and I think the ASA is doing extremely well to satisfy as many people as it has. The Motion in the name of the noble Baroness, Lady Deech, asks the Government what plans they have to review the governance of the ASA. I profoundly hope that in replying, the noble Earl, Lord Courtown, will say, “Absolutely none”. It ain’t broke, so let us not try to fix it.

Photo of Lord Palmer of Childs Hill Lord Palmer of Childs Hill Liberal Democrat 6:14, 29 October 2015

My Lords, I would also like to thank the noble Baroness, Lady Deech, for tabling this debate. Even though there are not many people here, there is obviously a rumbustious feeling about it almost before we begin. I feel somewhat intimidated speaking after the noble Lord, Lord Lipsey, and before the noble Lord, Lord Smith of Finsbury, the eminent chairman of the Advertising Standards Authority, and therefore I shall get the nice words out before I deal with the problems that I feel there are with it.

The noble Lord, Lord Lipsey, talked about the Advertising Standards Authority being—I think the words he used were—the jewel in the crown. In the few words that I am going to contribute to the debate, I want to say that there is an essential flaw in the jewel, and that flaw is not something that the Government should ignore. However, I shall start with the theme enumerated by the noble Baroness, Lady Deech; that is, the rulings of the Advertising Standards Authority. Despite the comments of the noble Lord, Lord Lipsey, I believe that many of them show a failure of self-regulation. They reflect inadequate reasoning for decisions which seem to change.

The ASA ruling on MAC Cosmetics was essentially on posters featuring pictures of an actress with pictures of her clothed lower body—specifically, pictures of her clothed crotch. When asked, the ASA said that they were not offensive. Whereas a Ryanair advert—the noble Baroness, Lady Deech, mentioned Ryanair, but this is a different advert; obviously the company is pushing the boundaries—showed a model dressed in a short skirt posing in a schoolroom. It was banned for being provocative. Personally, I cannot see how these are consistent decisions unless the judgments of the Advertising Standards Authority are dependent on whether they are turned on by an adult model or by someone posing as a schoolgirl. This is the point raised by earlier speakers: it really depends on which group of people in the ASA is making the decision. There is a great inconsistency.

Then there was confusion regarding a television advert for safe cycling in Scotland. Was it harmful and irresponsible to show a cyclist without a helmet and safety attire cycling down the middle of a road? At first the complaint was upheld, but five months later the adjudication was replaced, making the complaint not upheld. The advert was apparently now “not socially irresponsible”. I maintain that at times confusion seems to reign in the ASA.

Photo of Lord Smith of Finsbury Lord Smith of Finsbury Non-affiliated

Is it not a strength of a system where, if a regulatory body recognises that it has got something wrong, it can actually put it right?

Photo of Lord Palmer of Childs Hill Lord Palmer of Childs Hill Liberal Democrat

I thank the noble Lord for that. Indeed it is a strength, but it is also an inconsistency. It shows that there is a set of people in the ASA who are making decisions and then presumably another set of people come along and say, “That decision was not correct”. It does not generate respect for the decisions. When the Minister replies, will he say whether it matters that there is a lack of consistency in judgments or changes are made, which the noble Lord, Lord Smith, thinks is a virtue? Also, are there adequate guidelines about the use of experts in scientific and political beliefs? The noble Lord, Lord Lipsey, mentioned a particular Middle Eastern question which I do not have to hand, but are there experts from all sides of what is a ticklish problem for everyone in the international sector? I do not know, and perhaps the Minister can comment on that.

The noble Baroness, Lady Deech, mentioned in passing the Leveson inquiry into press self-regulation, and its drawbacks are a useful parallel to the ASA. I want to speak in a little more detail about that in the time I have than the noble Baroness, Lady Deech. Like the much-criticised Press Complaints Commission, the ASA has a chair appointed by the funding body, and an independent reviewer with a very limited remit. Leveson—vol. 1, page 219—criticised this model and lack of interest in and input from the public. He criticised press regulation because the standards were set by the editors.

The same is true of the ASA. The code is drafted entirely by advertisers. On page 1,624 of Leveson, he said that the ultimate code should be approved by an independent body. That is what the ASA should do as well. Leveson in vol. 4, page 1,759, says that good self-regulation requires,

“that the Chair and members of the Board are appointed in a genuinely open, transparent and independent way, without any influence from industry”.

The chair should be independent of any political party and an appointment panel should be used, including people such as the Commissioner for Public Appointments, for chair and board members, as mentioned by the noble Baroness, Lady Deech.

The Advertising Standards Authority, despite its eminent chair who I accept is doing a thoroughly good job—I have no criticism of the noble Lord, Lord Smith—offends against all this regulation criteria. Maybe it manages it but it does not make it right. The question for noble Lords and for the Minister, which is a point made by the noble Baroness, Lady Deech, is whether the practice of self-regulation is no longer the accepted norm.

We have talked about Leveson and the press. Now we are talking about the ASA. We mentioned the Shipman inquiry, which altered medical regulation. We mentioned the Clementi review, which altered the legal profession’s self-regulation. There is also the Etherington report, which heralds the demise of self-regulation in fundraising.

The ASA is funded by the industry; it is good that the Government do not have to fund it. Its chair is appointed by the Advertising Standards Board of Finance. In this case, it is a very good chair, but it is nice and comfy. Just because there is a good chair now does not necessarily mean that the chairs will always be as acceptable to many of us. The ASA is not subject to requests under freedom of information, which it would be in another guise. What is required is: governance by a board mainly from outside the industry; an appeal system; and—dare I mention it?—transparency. This could be achieved at the same cost by a statutory or consumer-led body funded by a levy on members. In this case, it is funded by a levy on members on a board that is self-regulated and which is not what we should be aiming for in this century.

Photo of Lord Smith of Finsbury Lord Smith of Finsbury Non-affiliated 6:23, 29 October 2015

My Lords, I must begin by declaring a very firm interest in this matter as chairman of the Advertising Standards Authority.

At the outset, let us remind ourselves of the overall picture. The ASA has been regulating ads in the UK for the last 53 years, and doing so very successfully. Last year we dealt with more than 37,000 complaints relating to 17,300 adverts. In addition to responding to complaints, we also initiated—of our own initiative—1,600 cases to make sure that the advertising codes were being complied with. Out of this, last year 3,384 ads were banned, removed or amended. If anyone thinks that the ASA is toothless, just look at this past week when we banned ads by some of the major companies in this country, including Boots, Bet365 and Coral. We act without fear or favour. In addition, last year we gave more than 194,000 pieces of advice or training to advertisers in order to make sure that they got it right in the first place.

All of this happens at no cost at all to the public purse; it is funded by a 0.1% voluntary levy across the advertising spend. We provide a one-stop shop for complaints about advertising in all media, including print, press, leaflets, cinema, television and radio, as well as online and social media. The self-regulatory system is able to respond to developments in the advertising world and in society much more quickly than a statutory system could. As the noble Lord, Lord Lipsey, pointed out, when we asked those who brought complaints to us whether they were satisfied with the way they were dealt with, even of those who were disappointed that we did not uphold their complaint 75% were very or quite satisfied with the process we went through.

I realise that of course the noble Baroness is not one of the 75%. It is worth noting that in her own case, which triggered her recent campaign against the ASA, she brought 22 separate items of complaint about an ad by Medical Aid for Palestinians. This was a highly complex case in an even more highly controversial area of public concern. Some of it related to matters of fact; some of it to matters of competing judgment. It needed very careful consideration. As well as to the ASA council, it also went to the independent reviewer, Sir Hayden Phillips. Only four of the 22 points were upheld, but no one can say that careful consideration was not given.

On one matter, I accept that the noble Baroness has a point, or at least part of a point. She believes that we should have brought in outside experts to advise on her case. We do bring in expert advice on some cases, normally to assist on detailed technical or scientific evidence. We did so in 16 cases out of 900 investigations last year. However, in a matter of political controversy, what would count as an expert? Who would qualify as an expert on all the passionately argued debates about Israel and Palestine? It is difficult, but none the less I have already made a commitment to the noble Baroness that, in future similar cases, we will give careful consideration to bringing in an outside expert if we genuinely believe that they may be able to assist the process.

However, on many other things that she said in her arguments this evening, the noble Baroness is simply not right. She said that the ASA was not able to be a full member of the Ombudsman Association. That is incorrect. The Ombudsman Association has three categories of membership: ombudsman members, which are categorised as meeting the criteria for technical ombudsmen; complaint handler members, which are categorised as having appropriate governance in place to function as best-practice complaint handlers; and associate members, who have an interest and relevant expertise in the work of the Ombudsman Association. Because it is not technically an ombudsman, the ASA is a complaint handler member. We are a full member of the Ombudsman Association and we share complaint handler status with the Information Commissioner’s Office, the Office of the Immigration Services Commissioner and the First Civil Service Commissioner and Commissioner for Public Appointments in England.

Photo of Baroness Deech Baroness Deech Chair, Equality Act 2010 and Disability Committee, Chair, Equality Act 2010 and Disability Committee

When I say “full member”, the ASA does not qualify in that top category, which has to be, as I said, independent of the industry or profession being regulated. The rules of the Ombudsman Association are quite clear on that.

Photo of Lord Smith of Finsbury Lord Smith of Finsbury Non-affiliated

The Ombudsman Association is perfectly satisfied with the governance and procedures of the Advertising Standards Authority. Indeed, as the noble Baroness will have noticed, the other entities with which we share complaint handler status would fit with any person’s consideration of independence and probity.

Secondly, the noble Baroness says that the codes of practice are written by the industry and that there is no external input at all. Yes, the codes are written by industry representatives, but only after very full and thorough consultation. The Institute for Government recently said, in commenting on the inadequacies of government response to consultation:

“However, an example of best practice is the way in which the Committee of Advertising Practice (CAP) and the Broadcast Committee of Advertising Practice (BCAP) reacted to the results of a consultation on applying advertising standards to e-cigarettes”.

It is best practice in the view of the Institute for Government, which is a thoroughly independent body.

Thirdly, the noble Baroness said that the ASA is not accountable to anyone outside the industry—that it is not overseen. First, on broadcasting ads we co-regulate with Ofcom. Secondly, we work very closely with trading standards; on occasion we refer recalcitrant advertisers to trading standards. Thirdly, we have a robust and independent review process in place. Fourthly, we are, of course, subject to judicial review. As the noble Lord noted, in 53 years we have failed in judicial review on only one and a half occasions. Finally, we have issued a commitment to good regulation, which is published and available to be viewed by anyone. We have committed ourselves to an external assessment and review of that statement of commitment next year.

Fourthly, the noble Baroness said that ASA members are somehow not independent. Two-thirds have no connection or involvement with advertising or marketing before they are appointed. That is a criterion for appointment. The chair has to have had no connection or involvement with advertising or marketing. Members are appointed not by the chair alone, but by open advertisement and interview by a panel of council members, now including an external person as part of the interview process. I invite her, as I have done before, to come and see the council in action. I dare her to suggest that it is not somehow independent.

We had a very interesting tour of the horizon of a number of complaints about the sexualisation of figures in advertising from both the noble Baroness and the noble Lord, Lord Palmer. This is precisely the point: an awful lot will always depend on the precise nature of the image, the context in which it is seen and the way it will be reacted to by the public in whose presence it will be seen. These are issues that can only be judged, case by case, by a committee of sensible, rational, independent-minded people. That is precisely what the Advertising Standards Authority council is.

This is a system of regulation that works. It is admired around the world. If noble Lords ask anyone in advertising or advertising regulation in any other country in the world, they will tell you that the ASA system in the United Kingdom is the gold standard for regulation. We do not get all the things that we do right. We do, however, get most things right. We tamper with it at our peril.

Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat 6:34, 29 October 2015

My Lords, we have had a very interesting debate. The noble Baroness made a trenchant case and is clearly on a mission, continuing the theme that she raised in an Oral Question last June. At that time, and again tonight, the noble Lord, Lord Smith, reminded us of the sheer volume of complaints dealt with by the ASA last year—37,000 complaints about 17,000 adverts—and the number of adverts that were changed as a result of its decisions. So this is a very important part of regulation and it is entirely legitimate for us to debate it tonight.

I have not always seen eye to eye with the advertising industry. After all, it opposed my tobacco advertising and sponsorship Bill on the basis that it would be the thin end of a wedge. Of course, it has not been. I probably still have an old copy of The Hidden Persuaders in my bookcase. As an in-house lawyer in the retail industry, I encountered decisions of the ASA that were sometimes unwelcome to the business I worked for. However, without a great deal of further evidence, I do not believe that the noble Baroness has made out her case tonight.

I have not always been a great fan of voluntary regulation in other areas. For example, I was critical of ATVOD in its early years. Given what the noble Lord, Lord Lipsey, said, perhaps as a lawyer I should be arguing ferociously for more statutory regulation, but fundamentally we have to judge whether a particular form of regulation works by its results. It seems to me that the ASA does a difficult job in areas where the sands frequently shift, when concerns are raised about the advertising of junk food, adverts featuring skinny models or those involving obesity, alcohol, computer games, e-cigarettes and gambling. All those areas are fraught with difficulty. It is not always easy to draw the line between a legitimate desire to protect the young and/or vulnerable in our society and general disapproval of particular ways of expression—indeed, of free speech.

Advertising is often blamed for the ills of society, when in fact it is perfectly legitimate marketing. Advertising, of course, operates in a climate where it is frequently the whipping boy for many social ills. We need to be scrupulous in insisting on evidence of harm, as I certainly did when dealing with tobacco advertising, and as I see is now taking place with the ASA’s review of junk food advertising. We should be scrupulous about adducing evidence before advocating bans.

Having done a press search for the ASA over the past six months, it is apparent what an extraordinary job it does. I do not agree with my noble friend that there is huge inconsistency. The range of complaints is extensive and the judgments are not easy. Just in the last two weeks, we have had a judgment about a cleavage competition and adverts in the Sun, which were not banned. We have had a tombstoning ad on television and in cinemas, which was banned. We have had Strongbow ads on YouTube, which were banned. All of those were rather difficult judgments. At the end of the day, however, what shines through for me is some rather refreshing common sense in the judgments. Going further back in time, there were judgments on the “Book of Mormon” adverts or the Paddy Power adverts involving Sepp Blatter and some expletives. Refreshing common sense is what comes through for me in those cases.

Where this issue really matters, however, is in the protection of children. “The Generation of Z: Apocalypse” zombie posters—I am sure noble Lords are familiar with those—were banned. I thought that was an entirely correct decision.

It is very tricky. In its judgments the ASA has to conform to what it perceives as the mainstream of taste and public opinion—and, in a sense, public morality and social responsibility. The great benefit, in my view, is the way that the ASA’s remit has been able to adapt over time, bringing consistency to advertising in different media and meeting new challenges as new advertising platforms emerge. The flexibility of the voluntary system run by the ASA is of great benefit.

We have heard from the noble Lord, Lord Smith, how long the ASA has been in operation—since 1962, starting in print; going into digital in 1995; its remit expanded to broadcast in 2004; video on demand in

2009; advertisers’ own marketing communications in 2010, and so on. If new platforms emerge, I am sure that the ASA will address those as well.

Of course, underpinning the ASA’s work are consumer protection regulations. It is not entirely non-statutory. The ASA has also had—and I say this in the presence of the noble Lord, Lord Smith—a very distinguished series of chairmen. We have had my noble friend Lord Rodgers, then the noble Lord, Lord Borrie—who knows more about consumer law than the noble Lord, Lord Borrie?—and now the noble Lord, Lord Smith of Finsbury.

There is another reason why it is important to have a system of regulation that is flexible and responsive. It is not always referred to as such but advertising is one of our creative industries. It is in fact the largest component of the creative industries in this country, at £19 billion. It supports half a million jobs. It is of great importance and drives growth, as Deloitte established in its report, in the order of £100 billion. It funds other parts of the creative industries. One has only to look at the ITV advertising to establish that. That is all the more reason to be cautious about introducing new, untried regulation.

The noble Lord, Lord Lipsey, said if it ain’t broke, don’t fix it. He stole my final line. I do not think the system is broken. The noble Baroness is a formidable regulator but, particularly in the face of what the noble Lords, Lord Smith and Lord Lipsey, have said, I am not persuaded by her argument. She said that the era of self-regulation is over. In this case, I really do not agree. That is an assertion but it is theoretical. It is saying that the regulator is not fit for purpose but I do not see the evidence. Without further evidence, I agree with the statement in the coalition Government’s July 2013 paper that:

The UK benefits from a healthy and successful advertising sector, underpinned by an exemplar of successful self-regulation, the Advertising Standards Authority”.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Shadow Spokesperson (Business, Innovation and Skills), Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport) 6:43, 29 October 2015

My Lords, it has been a very good debate and we all owe a debt of gratitude to the noble Baroness, Lady Deech, for allowing us to expand on the issues that she has raised here. There is tremendous expertise around the Chamber. Who would have thought that we had a gold medallist in complaining sitting in our very midst? How wonderful to hear that. It is good to see the noble Lord, Lord Smith, in fine form, as combative as ever. He is too often absent from our discussions. I wish he would spend more time here. He must tell us some time what was going on in 1962 that led to the ASA being established. It must have been an interesting time, from all that we have heard tonight.

I did feel a little uncomfortable at times because we seem to be re-hearing a private discussion, one perhaps more restricted to the halls of the ASA, and it will be difficult for us to draw very much from some of the points made here because not all of us were involved in the process. I am sure the Minister will agree with me on that. However, in the interstices of that debate there are a number of points worthy of further reflection.

First, it is interesting, as was picked up by the noble Lord, Lord Smith, that most of the points that were raised for debate about what was happening in the field—apart from the political point raised by the noble Baroness—concerned the question of taste and decency. Of course, this is an area that politicians should keep well away from and we are wrong to even think about discussing it. But it makes the point, which I think was picked up by the noble Lord, Lord Clement-Jones, that whoever does this job has to have good connections to the wider world to understand the way that people are thinking about the issues being used by advertisers. They should be able to design a structure of receiving and dealing with complaints that engenders trust in their judgments. That point is so important that we should hold on to it as this goes forward.

I have no doubt that all the people involved in the current systems run by the ASA are doing their very best to make a good job of it and doing it as well as they can. I do not think that any imputation was being made about that. However, as the noble Lord, Lord Palmer of Childs Hill, asked, “Just because it is going well, does that make it right? Do we have to stick with the model we have or can we think of better ones?”. That is what the debate ought to be about. Can we do this better or fairer? There were, for example, questions about costs: “We are getting this for free, so should we not stay with these arrangements?”. However, other regulators, not least the FCA, raise their own funding. We should not be stuck on a particular model just because it happens to be cheaper than anything else.

Another matter that came out strongly in the debate is that the points raised in the Leveson inquiry seem extremely relevant to this debate. They should not be discarded simply because they do not point in the direction of advertising. The structures that were considered and the arrangements under which decisions would be taken—along with the appeals system, the role of Parliament and the role of other regulatory bodies—were all carefully mapped out by Sir Brian Leveson. There are issues here that would read across into the discussions we are having. For example, surely it is relevant that Leveson does not call for a statutory solution, at least not initially. He calls for the industry to self-regulate, but in a way which is perceived to be independent from and not attached to any interest groups, particularly those which fund the bodies that are currently operating.

Where does that leave us? Simply trying to defend the existing arrangements against any other model that might come up is not really where we want to get to. As the noble Baroness, Lady Deech, said, there are wider issues here about self-regulation, which might be helpful in trying to get to the right decision at a time of reconsideration within the wider community about how regulation operates.

I have a list of points which I suggest the Minister should respond to when he gets to the Dispatch Box. First, 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. I would be grateful if the Minister could respond on that point.

Secondly, it is not at all clear to me that the consumer interest is as well represented as has been argued in some of the discussions that should be taking place around the ASA. We in this Chamber have tried in a number of debates to find ways of improving the engagement of consumers on, for example, the FCA and the CMA. There is no perfect model, but the existing model, as far as it has been explained to us, is not the right one.

Thirdly, there are all sorts of things happening out there in the real world, as was touched on by a number of speakers, where there is currently no apparent regulatory function—good or bad. I think particularly of things such as the dark web but also of some social media. Are we confident that the existing agencies have the capacity and technical expertise to begin to think about those issues? There is no easy option.

In the modern world, given that most organisations which engage in advertising will be large companies based outside the UK—much the same as those which produce television and film materials; and even if they are in the UK, they will have a small presence here but will largely be run from elsewhere—do we have sufficient sanctions and ability to deal with penalties, should there be a need to do so, in time? The current sanctions are largely persuasive and largely reliant on the ability to shame those affected by the judgments into changing their behaviour. I am not saying we necessarily would wish to do this, but should there be need for financial penalties or custodial sentences, is it right for a body set up by industry to have that responsibility? If that is where we are going, do we not need to think more carefully about the statutory elements that might be involved in that? Ofcom obviously is a possibility, and it may be that that is an area we might want to look at.

Photo of Lord Smith of Finsbury Lord Smith of Finsbury Non-affiliated

Perhaps I may just very briefly point out to the noble Lord that at the ASA we do, if there is a persistent, recalcitrant non-complier, refer them, in the case of a broadcast ad, to Ofcom, and in the case of any other ad, to trading standards. Statutory criminal action can then follow.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Shadow Spokesperson (Business, Innovation and Skills), Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport)

I am grateful to the noble Lord for pointing that out. I had not picked that up in the voluminous material which has been circulating. I am grateful to him for reminding me about it, but he makes the point that I was always going to make: the ASA’s ability to operate in that way at the moment is largely based on coregulatory activity not a self-regulatory arrangement. That, again, is a complexity. I am not saying it is wrong; I am just saying that we need to tease out what we want from this and make sure that it aligns properly.

I end by referring to ATVOD, which the noble Lord, Lord Clement-Jones, mentioned, because there has been a change here which I think is significant. The coregulatory structure with Ofcom is to change from December 2015. As many noble Lords will be aware, ATVOD used to do coregulation with Ofcom for TV on demand. According to Ofcom, the change which has been put forward is based on the feeling that Ofcom should do this on its own in future,

“in light of the increasing convergence of linear services and on-demand programme services, the Single Digital Market Review in the EU, and the need for a comprehensive solution to the future of content regulation”.

That seemed to be a way into having a further discussion about whether or not it should go further than simply to ATVOD.

This has been a good debate and there are lots of things here to take forward. I do not think we should get stuck on the particularities of the specific issue raised by the noble Baroness, Lady Deech, but I do think that her experience has given her sufficient vigour and interest to take this to another stage. We should respect that and try to give her a good answer.

Photo of The Earl of Courtown The Earl of Courtown Lord in Waiting (HM Household) (Whip) 6:52, 29 October 2015

My Lords, I, too, thank the noble Baroness, Lady Deech, for securing this debate and for the contributions of all noble Lords. The impact of advertising and its regulation are clearly issues that attract strong interest and feeling from many in the House.

I will look at some background to the industry, as the noble Lord, Lord Clement-Jones, did. The UK’s advertising industry plays a key role in our economy and is a world leader. The sector was worth £10.2 billion in 2013—the second-highest contributor to our economy of any creative industry sector—and has grown by 67% since 2010. The core advertising and marketing sector employed 167,000 people in 2014, and nearly half a million if you include those employed in advertising and marketing jobs in the wider economy.

As well as being important in its own right, advertising plays a crucial role in helping secure the UK’s economic recovery. Without advertising, brands cannot make their mark on the marketplace and consumers cannot make informed purchasing decisions. Advertising helps to stimulate competition, innovation and expansion. Internationally, the UK’s advertising industry has a tremendously strong reputation—a disproportionately large number of global iconic advertising and marketing campaigns has involved UK creative talent, either in ad agencies themselves or in supporting sectors, for example film, music and graphic design. We have the most awarded ad agencies in the world as a proportion of GDP, exporting £2 billion a year in agency services, and London is an undisputed international advertising hub.

Nobody is arguing that this industry should not be regulated. The question is what form of regulation would be most appropriate and effective.

As a matter of principle, this Government prefer effective self-regulation over statutory regulation. We support the system of co-regulation and self-regulation for broadcast and non-broadcast advertising enforced by the Advertising Standards Authority. We believe that this regulatory system has worked well for both customers and advertisers, and we support the previous Government’s assessment, mentioned by the noble Lord, Lord Clement-Jones, in the 2013 policy paper Connectivity, Content and Consumers: Britain’s Digital Platform for Growth, that it is an exemplar of successful self-regulation.

The ASA provides an easy one-stop shop for both public and advertisers, and allows for flexibility to take on additional responsibilities, such as online advertising, relatively speedily in the light of technological changes compared with a statutory regulatory regime. The system is free to the taxpayer and is a cost-effective way to resolve grievances. It allows for harmonious decision-making for cross-media adjudication decisions and promotes corporate social responsibility by ensuring that industry has a strong stake in maintaining an effective, robust system to ensure a high level of consumer trust in its products.

A very good example of what self-regulation can do that the Government cannot is Clearcast. This is a commercial service which checks whether broadcasting ads are in breach of the BCAP Code before they are aired. It is used by Channel 4, Channel 5 and Sky, to name but a few. Some commercial broadcasters have made it mandatory for ads to undergo a Clearcast check—something that would be regarded as censorship if it came from the Government

The noble Baroness, Lady Deech, and the noble Lord, Lord Palmer, mentioned the independence from industry of the ASA. As the noble Lord, Lord Smith, mentioned, the ASA council is the independent jury that decides whether ads have breached the advertising codes. The ASA chair is appointed by the chair of ASBOF for a renewable four-year term, but the post holder must be independent of the advertising and media industries. Two-thirds of council members on each panel are independent of the advertising and media industries, and members are appointed through an open recruitment process, with all positions advertised. Following a review of the appointments process, the chairman will in future appoint an independent person to participate in the recruitment of all council members.

The noble Baroness drew a comparison with the press regulator, which was also mentioned by the noble Lord, Lord Stevenson. The Government want the press to comply with the reforms recommended by Leveson and enshrined in the royal charter, and want to see a self-regulatory regime that is tough, independent, fully subscribed and commands confidence. The noble Baroness also mentioned ads likely to cause extreme offence. The ASA has a number of options enabling it to act quickly where there is risk of great harm or offence. In extreme cases, it has the power to order advertisers to remove ads from publication immediately on receipt of complaint and before investigation. Where it may not be necessary to use that extreme sanction, but where there is a need to rule quickly, the ASA’s procedures allow for timescales to be shortened according to need. The noble Baroness also mentioned various examples, including those of pornographic pictures. She questioned the decisions of the independent self-regulator. It is not for the Government to comment on decisions taken.

The noble Lord, Lord Palmer, raised the subject of funding. The ASA is funded by levies on advertising spend, but this is collected at arm’s length by both the Advertising Standards Board of Finance and the Broadcast Advertising Standards Board of Finance. This maintains the system of independence, ensuring that decisions are not influenced by those who may or may not be funding the system, while ensuring proper funding.

The noble Lord, Lord Stevenson, and the noble Baroness, Lady Deech, also mentioned the EU directive. The EU directive concerns misleading and comparative advertising. In the United Kingdom, this EU law is implemented through business and consumer protection regulations, enforced by trading standards. The CAP and BCAP codes administered by the ASA reflect the regulations as far as they apply to advertising covered by the codes, and the ASA has an agreement with trading standards that it will in most circumstances act in the first instance in alleged cases of misleading advertising. Judicial reviews of ASA rulings have repeatedly endorsed the ASA’s authority and processes in the area of misleading advertising.

The noble Lord, Lord Clement-Jones, mentioned consistency, which was also of concern to the noble Lord, Lord Palmer of Childs Hill. The noble Lord, Lord Clement-Jones, appeared to say that he felt that there was consistency in the decisions of the ASA.

The noble Lord, Lord Stevenson, also talked about consumer satisfaction. The ASA carries out a customer satisfaction survey. Latest data show customer satisfaction with complaint-handling at over 70%, despite the ASA upholding only a minority of complaints received. That figure compares very favourably with other government and industry regulators’ handling of complaints.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Shadow Spokesperson (Business, Innovation and Skills), Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport)

I was not exactly commenting on that, although others did and it is useful to have that figure repeated. I said that the matters that cause the most difficulty for the ASA are taste and decency, and to some extent those that are political. That requires there to be good and enduring relationships with consumer engagement, which I do not see but may be there. It was that point I was probing.

Photo of The Earl of Courtown The Earl of Courtown Lord in Waiting (HM Household) (Whip)

I am glad that the noble Lord was able to clarify that. As with any regulatory regime, there is always room for improvement, and the ASA would welcome suggestions on how its procedures might be improved. I will also ensure that I bring the department’s attention to this debate and all that was said by noble Lords. Nevertheless, the Government believe that overall the ASA is an effective regulator.

House adjourned at 7.02 pm.