Firm banned for misleading BTL investors

Firm banned for misleading BTL investors


A warning to all those advising that Buy to Let (BTL) investment is the best way to safeguard money, as opposed to traditional savings accounts, has been issued after the Advertising Standards Agency (ASA) banned a property firm for running misleading investment advertisements.

According to Property118, the ASA issued the ban to estate agents Aldermartin Baines and Cuthbert after it held that the adverts it broadcast were encouraging the wrong type of consumer to undertake unregulated investment in BTL.

The ASA took action after three complaints were made back in January, on the basis that advertisements such as these should instead be limited to specialist financial media - a target audience that is much more financially savvy.

The advertising regulator believes the risks associated with BTL go beyond tenants not paying their rent, however, Aldermartin Baines and Cuthbert’s adverts were implying that this kind of investment presented a healthy alternative to saving, Property118 reported.

Information within the ad stated: “The bank may be the safest place for your money, but Aldermartin Baines and Cuthbert estate agents would argue that it’s not the most sensible place.

“If you have cash on deposit in the bank, you may be getting only half a per cent interest on your money and inflation will be working against you by eroding your savings. So, what’s the alternative?

“Here at ABC Estates we’d like to suggest investing in property, good old bricks and mortar. Put your savings in a buy-to-let investment instead and you could generate a five per cent return on your investment, maybe more. Inflation would then actually work for you by eroding the value of your mortgage debt.”

The ASA said: “We considered the ad misleadingly presented buy-to-let investment as low risk, in that it suggested it was an alternative, or a preferable option, to saving and did not make clear the potential risks associated with such an investment.”

“Ads for investments not regulated or permitted under the Financial Services and Markets Act 2000 (FSMA) may be broadcast on specialised financial channels, stations or programming only. Buy-to-let is not regulated under FSMA but considered the ad, which appeared on a non-specialist channel and emphasised an investment opportunity, promoted an investment. Because the ad promoted an investment not regulated by FSMA, we considered it should not have been broadcast on a non-specialist channel, regardless of whether or not it made clear the potential risks involved in buy-to-let investment.”

However, Aldermartin Baines & Cuthbert, responded: “We do not accept the ad misleadingly presented buy-to-let as a low risk investment. The ad did not mention ‘low risk’ but focused on inflation eroding the value of money, either on deposit or as the debt of a mortgage. This was obvious and would not mislead anyone. The investments were low risk, because they gave an independent insurance backed rent guarantee.

“If a deal was considered risky, banks would not lend on it, particularly in the current economic climate.”


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