Hanover fails in its claim to withstand ‘any conditions’

Just four weeks after it failed to have a complaint that one of its advertising campaigns was ‘grossly misleading’ overturned, Hanover Finance froze funds worth $554 million as it failed to meet its repayment obligations.

It wasn’t just advertising that was extolling the virtues of Hanover’s robustness. Some investors wanting to cash up their funds had repayment requests refused and were apparently told just days before the failure that their money was safe.

Given what’s being described as a ‘meltdown’ in the finance and property sectors, how can investors believe anything that’s promised? And what about the promises made by other businesses in other sectors? How can consumers and investors be confident in the claims that are made?

The short answer is, we can’t. Anyone can make any claims they like about any product or service they sell, so long as they do not breach the Fair Trading Act and deceive or mislead. Clearly, Hanover’s claims that it was a company ‘with the size and strength to withstand any conditions’ were, indeed, misleading. Quite why Hanover executives approved this wording amazes me given that it left itself wide open to a challenge.

Hanover’s claim, coupled with the endorsement and voice-over from former One News anchor, Richard Long, was clearly designed to lend an air of trust and stability and set it apart from smaller players in the market. However, neither its advertising claims nor the celebrity endorsement protected investors from accessing their money when Hanover went belly-up.

Whilst it’s probably cold-comfort to investors and others caught up in the failures in the finance sector right now, as a consumer, it’s worth being somewhat cynical about all claims made. It’s an advertiser’s job to persuade, not inform. Claims are not guarantees and even guarantees can be largely futile.

As a business, over-promising but under-delivering is not only one of the biggest reputation damagers there is, it’s also extremely bad business practice. Ensure the claims you’re making are accurate or risk being caught-out big-time. Be willing, too, to provide detailed information to nervous consumers who may have been burned in the past. Act with integrity and avoid making spurious claims you may later regret.