To ask Her Majesty’s Government whether they will consider establishing a statutory regulator of media advertising.
My Lords, as a matter of principle, the Government prefer effective self-regulation over statutory regulation. In the case of the advertising industry, 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 works well for consumers and advertisers, and we support the previous Government’s assessment in its 2013 policy paper that the ASA is an exemplar of successful self-regulation.
Effective, yes. My Lords, last July I saw an ad in the New Statesman for magnetic stimulation treatment for Alzheimer’s. I guessed it was not effective and I complained to the ASA. Yesterday, eight months on, it upheld my complaint, but now nothing happens. No one is fined or reprimanded; no one has to contact the people who bought this machine on a false prospectus, let alone compensate them for being misled. Is the Minister really happy with that self-regulatory system with no enforcement? Will she agree to discuss with the ASA, whose chair is in the House, whether better consumer protection could be developed?
I can understand that the time delay was frustrating for the problem the noble Baroness mentioned. It took time because the ASA is sensible at bringing in outside expert advice when it needs to be sought to get the right decision. The ASA can deploy sanctions of various degrees of severity on advertisers it regards as non-compliant. These sanctions are usually proactively taken by the ASA. It is certainly very independent in the way it looks at things.
My Lords, the dangers of self-regulation were referred to not long ago by the noble Lord, Lord McNally. Does the Minister not share my concern about the way in which the ASA is not accountable to anybody? It is funded by the advertisers, the chair is appointed by the advertisers’ funding council, the council is appointed by the chair, the code of practice is written by the industry, the chair and the council provide oversight, and it is not even subject to freedom of information. It is hermetically sealed. This is not right under 21st-century governance principles.
There are a lot of questions for me to answer there. As far as funding is concerned, the ASA is indeed independent. It is funded by levies on the advertising spend, which seems fair since it is the advertisers that it is regulating. It is collected at arm’s length by two bodies—the advertising and broadcasting standards boards of finance—to maintain the independence of the system, ensuring that the ASA decisions are not influenced by those who may or may not be funding the system. Also, the board is fully independent, chaired by the noble Lord, Lord Currie, who I believe is here today, and two-thirds of the council members are independent.
My Lords, last year Google paid UK tax of £36 million on £5.6 billion in turnover. For Facebook, the figures were £5 million of tax on £1.8 billion in turnover. The Minister will know that the EU has proposed a 3% turnover tax to stop this gigantic tax injustice. Does she agree that it would be better to use statutes to make internet giants pay fair taxes than to amend the status of the ASA, which, as she says, is an exemplar of self-regulation? A Lord Keen answer would be okay.
Certainly, online advertising takes up over half of all the ASA’s work. The self-regulating system allows for flexibility to take on additional responsibilities. The ASA has also developed new sanctions to help tackle harmful, offensive and misleading advertising contact online where there is no traditional gatekeeper. I may have to get back to the noble Lord on the question of tax, which is slightly beyond my brief.
Would the noble Baroness perhaps return to the original Question from my noble friend on the Front Bench regarding the effectiveness of any sanctions that the ASA may have at its disposal or, indeed, choose to use? As we have just heard, the online world is extremely fast-moving, so it is very hard for any organisation to have proper oversight of what is going on there because it is not very transparent. It is very difficult to see how consumers are getting effective redress, even when complaints are upheld.
I understand where the noble Baroness is coming from. Obviously, this is such a fast-changing world. The ASA does indeed have strong sanctions that it can deploy if the advertising industry is not doing as it is meant to be doing. There is ultimate referral to the trading standards department if there is a breach of consumer protection law, and it can consider stronger sanctions, as I said, if advertisers persistently break the code of the ASA rulings.
“Ads that directly or indirectly promote an HFSS product cannot appear in children’s media. Ads for HFSS products cannot appear in other media where children make up over 25% of the audience. Ads for HFSS products will not be allowed to use promotions, licensed characters and celebrities popular with children”.
We are now trying to get advertisers to use these techniques to better promote healthier options for children.
I will certainly undertake to answer any questions that I have not answered already. The Government, however, prefer effective self-regulation to statutory regulation and we are happy with the way things are going at the moment.