One of the things said to unite successful investors and journalists alike is an awareness of the world around you.
Which brands and companies people are choosing, what’s cropped up that’s new and exciting, and what seems to be falling by the wayside.
I can’t claim to be either, but now I’ve re-emerged blinking into the sunlight after the country’s third lockdown, it’s time for the resumption of one of my favourite forms of newsgathering: looking at adverts on the tube.
Transport for London owns a fifth of the country’s advertising space
Because the chances are, if I’m asking, ‘what is this supposed 5 per cent guaranteed risk-free offer?’, plenty of others will be too.
And the millions of people who use our public transport system every day, many of whom are unlikely to have anything more than brief knowledge of financial regulation, cryptocurrencies or investment risk, are also likely thinking anything displayed has been rigorously checked and approved in advance.
So you would hope. Sadly, the truth isn’t quite so rosy.
As I reported in February last year, a Chinese cryptocurrency firm called Zeux was allowed to plaster adverts for a 5 per cent ‘savings’ rate all over the London Underground, without anyone raising an eyebrow at it in advance.
It managed to slip through a hole in a regulatory regime which said the actual financial elements of its adverts were handled by the financial regulator, the Financial Conduct Authority. The FCA preferred to try and drown me in paperwork rather than give me a straight answer as to whether it had approved these ads beforehand.
Needless to say, it hadn’t.
Meanwhile Transport for London, which remarkably owns a fifth of the entire country’s advertising space, has a subsection of its advertising policy devoted to promotions of lap-dancing clubs, but not for financial adverts which would seem to pose far more harm.
After all, to paraphrase Jennifer Lopez in the 2019 film Hustlers, about a group of strippers turned thieves, what is someone going to say, ‘I lost five thousand dollars at a strip club, send help’?
In February 2020 we reported on a Chinese cryptocurrency firm which had dressed itself up as a best buy savings account
As much as I’d love to say this story caused uproar and led to a seismic change in the way public advertising is regulated, it didn’t.
In the last few months alone, we have had the collapse of Football Index, a gambling platform which claimed to let people buy and sell ‘shares’ in football players and earn ‘dividends’ based on their performance, presumably based on valuations devised on the back of a scrap of paper.
The company, which has left customers £90.5million out of pocket according to its administrators, was told by the Advertising Standards Authority to stop likening itself to an investment platform as long ago as September 2019.
A sponsored YouTube video from that June saw it describe itself as ‘basically the football stock market’. A punchy ruling from the ASA said it needed to stop ‘creating the impression their product was an investment opportunity when that was not the case.’
Football Index, founded by porn tycoon Adam Cole (pictured), frequently likened itself to a football stock market, despite being a gambling company
And yet still it kept up the pretence, with a NASDAQ-style ticker and the investment language persisting almost up until its collapse.
Such was the façade this firm was perpetuating I was even told that several years ago it was potentially looking to apply to the FCA for an investment licence.
And then only the other week we had a cryptocurrency brokerage called Luno rapped by the ASA for using the advertising strapline: ‘If you’re seeing bitcoin on the Underground/a bus, it’s time to buy’.
Needless to say, the ad failed to mention bitcoin has seen its value fall 46 per cent since mid-April and is so intensely volatile it can lose investors thousands in a day.
Cryptocurrency exchange Luno was told to take down adverts for failing to mention the massive risk involved in trading the likes of bitcoin
The company has said it has introduced ‘new signage in London’ in a cringeworthy tweet ahead of the ASA’s ruling, which came nearly a month after complaints about the adverts surfaced on social media.
However even in spite of this, I was telling a friend of mine in the pub in Soho last Friday all about this sorry saga, and mid-conversation a bus with the same, supposedly banned, advert rolled past the window behind him. I found the same one last week in Euston tube station.
And this is all without getting into the Wild West that is online advertising, which was brilliantly exposed by journalists at our sister title Money Mail, who set up a scam advert on Google for just £96 which received 1,700 click-throughs.
The search engine giant, by directly taking money from both scammers and then for warnings from the people trying to stop them, is playing both sides in a manner worthy of a character in a John le Carré novel.
However the adverts remain widespread, even though the company claimed it had launched ‘new and improved adverts’
As another senior financial journalist wrote on Twitter a little while back, the FCA might even be better off just paying someone to type ‘best fixed-rate bonds’ into Google on a daily basis, such is the game of whack-a-mole we all seem to be playing.
But closing the stable door after the horse has bolted and taken thousands of pounds of people’s money is a waste of everyone’s time.
The real question then, as my rather exasperated editor Simon Lambert put it on last week’s This is Money podcast, is who is OK’ing this stuff in the first place.
Who at TfL, the FCA or whoever else, thought: ‘If you’re seeing bitcoin on the side of a bus it’s time to buy’ was an appropriate strapline to place in front of millions of financially unsophisticated people? Cryptocurrency trading isn’t even regulated at the moment.
And who at Google, or our regulators, thinks adverts for bonds paying 9.5 per cent, at a time when 24-month savings accounts have just nudged 1 per cent for the time since last December, pass muster?
Maybe we don’t expect better from the technology giants these days, but we should from the people approving the adverts on public transport networks.
Some have argued that adverts for cryptocurrency should be banned as a result. I get the argument, but I actually think it lets our regulators off the hook. After all, if it’s all banned, then it’s nothing to do with them, it’s the consumer’s fault.
It lets them avoid the question of why a cryptocurrency firm is allowed to dress up as a savings account, as to why a betting company can clothe itself as an investment firm, and why something so volatile it can swing 15 per cent in a day can sell itself a risk-free purchase.
And they should be asking themselves why, after all the losses to fraud and in scandals like London Capital & Finance, Football Index and Basset & Gold, these things keep happening again, and again.
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