Joint Committee on The Draft Communications Bill Appendices to the Minutes of Evidence


Memorandum submitted by ISBA


ASA/CAP Industry co-regulation

  The UK model for "self-regulation" of advertising in the non-broadcast media has been widely recognised as effective, efficient and fair. The Advertising Standards Authority (ASA) is an independent body that implements the Industry's Codes of Advertising Practice and Sales Promotion (CAP) and is funded by a levy on advertising media spend collected by the Advertising Standards Board of Finance (ASBOF). It is applied equally to all advertisers (other than political parties) and is backed up by the powers of the Office of Fair Trading (OFT) with respect to misleading advertising, effectively making the system co-regulation, or "accredited self-regulation".

Communications Bill—an opportunity to extend industry co-regulation

  The proposed reforms in the Communications Bill provide the right vehicle to extend co-regulation to all media. The widely respected ASA/CAP system is the role model on which proposals to cover broadcast advertising will be based.

  As the broadcast media adapts to the challenges of the new media and the burgeoning choices available to viewers and listeners the dividing lines between the media will become less distinct. Yet no one doubts the need for standards to be set and applied. "Self-regulation" within a co-regulatory framework is a well-tested means to achieve regulation, without the legislative and organisational hurdles that State-regulation inevitably entails.

Government's Communications Bill challenge to Advertising Industry

  In the Policy Paper, published with the draft Bill, the Government has noted that it awaits proposals from the industry before considering the issue of industry co-regulation further (see note 1). The industry has delayed making these detailed plans until ground rules for co-regulation ASA style have been accepted. The principal concern surround definitions (note 2). Pure self-regulation, where industry draws up codes in consultation with interested parties, then administers them and applies sanctions is not one that, in practice, we have adopted in the UK. The ASA model is a form of co-regulation that gains its strength from the double authority of industry codes with the back-stop powers of the Office of Fair Trading. That is to say the codes are not voluntary in a way that some industry "best practice" codes would be. It is this co-regulatory model AA/ISBA recommends for broadcast regulation. It is important to advertisers however that industry owns the codes and that the implementation of the codes resides with a fully independent body. A reading of the Policy Paper leaves open the possibility that the Government wishes to exercise authority over the codes production and the implementation, whilst asking industry to pay. This is not a model that is likely to find support in the advertising and media industries.

Advertising Industry Objectives:

    —  OFCOM will be empowered to effect a genuine transfer to authority to a new "self-regulatory" body;

    —  this new "self-regulatory" body must retain code ownership;

    —  and exclusive rights to consider complaints;

    —  include BACC and RACC pre-clearance;

    —  decisions of the self-regulatory body must be sovereign ie OFCOM cannot overturn them;

    —  OFCOM to retain back-stop powers to step in when the established means (ie "self-regulatory" body) have been exhausted; and

    —  there is no transfer of costs without a meaningful transfer of real authority.

Implications for advertisers

  It should be noted that achieving media neutral co-regulations along the lines of the ASA model would have two clear implications for advertisers:

    —  a new levy on broadcast advertising spend to pay for the new system balanced by reduced costs for broadcasters;

    —  transfer of legal liability from broadcasters to advertisers, as is the case currently with non-broadcast advertising.


  1.  Communications Bill Policy Paper, published with the draft Bill, noted that the Government awaited proposals from the industry before considering the issue of industry co-regulation further. The industry, ie advertisers, agencies and media through the Advertising Association, however rejects this approach for good reasons, which are best summed up in the words of the Policy paper:

    "OFCOM will therefore be able to apply consistent overarching content standards to all forms of broadcasting including advertising and it is to be given principal responsibility for regulating broadcast advertising. Within this context, there may nevertheless be the opportunity for a greater degree of industry co-regulation, based on the development of industry practices that conform to and contribute to the advertising standards that are laid down by OFCOM.

    Progress has been made with the standards application and pre-vetting work of the two industry run advertising clearance centres, BACC for TV and RACC for radio.

    We are keen to see further developments building on this and drawing upon the experience of the Advertising Standards Authority in running a self-regulatory system. The formal delegation of OFCOM's powers to set advertising standards is not envisaged partly because of limitations imposed under relevant EC directives, but this will not impede the further development of industry co-regulation.

    The White Paper set out a challenge to the advertising industry and to broadcasters to set out proposals for more effective co-regulatory arrangements. We have yet to see specific proposals. Although this eventuality is not covered expressly in the wording of the Bill, the draft legislation allows OFCOM wide flexibility in the methods it uses for meeting its stated objectives. These methods would include further industry co-regulation in the event that suitable proposals come forward."

  Industry's position is very clear. "Accredited self-regulation" or "self-regulation in a co-regulatory framework" carries with is some basic requirements:

    —  Industry ownership of codes.

    —  Independent adjudicatory body appointed by ASBOF.

    —  Industry funding via an ASBOF levy.


  The issue of definitions is crucial to avoiding misunderstanding. We generally call the ASA/CAP system self-regulation rather than co-regulation, which it is in practice.

  The problem is that there appears to be no accepted definitions. The terms are used indiscriminately to describe a whole range of practices, ranging from near State regulation, through well-defined systems like ASA/CAP, to loosely designed schemes.

  The ASA/CAP advertising system is best seen as an alternative to state legislation. If the industry had not obliged the Government would have legislated. This marks it out as very different from sectoral industry "best-practice self-regulation" schemes.

What is the difference between Co-Regulation ASA Style and Best Practice Self-Regulation?

  Best Practice Self-Regulation would have:

    —  No legal authority but be administered typically by a Trade Association with expulsion as the only effective backstop power.

    —  Genuinely seek to impose standards above the legal minimum.

    —  Be a voluntary scheme.

  Co-Regulation ASA Style may be characterised as:

    —  Compulsory for all advertisers.

    —  Sets standards that are the minimum that advertisers must reach.

    —  Is backed up by the powers of the OFT and by the unspoken threat of Government legislation should we ever slip below the standards expected by the Government of the day.

    —  But is genuinely self-regulated in:

      1.  Code content.

      2.  Industry control over appointments and code committee via ASBOF.

      3.  Paid for by advertisers.

      4.  Independence of the Regulator from Government and advertisers.

July 2002

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