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Response to the ASA ruling

Wed, 18th Oct 2017 07:00

RNS Number : 8824T
Purplebricks Group PLC
18 October 2017

18 October 2017

Response to the ASA ruling

One issue dismissed - one upheld, updated TV adverts on air

The ASA has today issued its conclusion on two issues relating to the Purplebricks TV adverts in the UK. The first issue, whether the TV adverts implied that Purplebricks did not charge a fee for its service, was dismissed by the ASA. On the second issue, the ASA agreed that it was not sufficiently clear in the TV adverts for the average consumer, that the flat fee was payable to Purplebricks in all instances.

Purplebricks has already updated its UK TV adverts to make this even clearer. The new wording has been approved by Clearcast. While the new text has only been aired for a couple of days, there has been no noticeable impact on the business.

Purplebricks would like to make clear that it now has a proactive, regular and positive dialogue with the ASA and all other relevant professional bodies. The TV adverts followed the proper approvals process, being cleared by industry body Clearcast who, unlike the ASA, have the role of giving prior approval to TV adverts. No issues were raised.

Commenting on the announcement, Michael Bruce, Group CEO, said:

"We are surprised by the ASA judgement on the flat fee wording because prior to air our adverts went through the proper approvals process, including the official clearance body Clearcast who have continued to support their original judgement with the ASA.

Purplebricks is firmly on the side of the consumer, offering an alternative to the commission based model. As a leader of industry change some noise is inevitable.

Purplebricks is committed to increasing levels of transparency within the industry, publishing its fixed fee rates on the home page of its website so all consumers from the outset have certainty as to the cost of selling. Purplebricks is far more transparent than traditional estate agents who do not typically publish their rates, allowing them to charge much greater and varying fees dependent upon a customer's ability or capacity to negotiate."

For further information, please contact:

Purplebricks

+44 (0) 20 7457 2020

Michael Bruce, James Davies

Zeus Capital (NOMAD)

+44 (0) 20 3829 5000

Nicholas How, Benjamin Robertson

Peel Hunt (Broker)

+44 (0) 20 7418 8900

Dan Webster, George Sellar

Investec Bank (Broker)

+44 (0) 20 7597 5970

Keith Anderson, Carlton Nelson

Instinctif Partners

+44 (0) 20 7457 2020

David Simonson, Mark Reed, George Yeomans

Notes to Editors

Purplebricks is the leading next generation estate agency in the UK and Australia, combining highly experienced and professional Local Property Experts and an innovative use of technology to help make the process of selling, buying or letting so much more convenient, transparent and cost effective. Purplebricks is transforming the way people perceive estate agents and estate agency. Building on its UK success, Purplebricks launched into Australia in August 2016 and the US in September 2017.

Unlike traditional agents, where customers only pay upon the sale of the property, which effectively means that those that do sell pay more in order to cover the costs of those that do not sell, Purplebricks believes it is more equitable that everyone should pay, charging a flat fee at instruction. This helps to avoid the industry issue of timewasters and those that are merely 'testing the water' and underpins the low, flat fee model.

Customers in the UK and Australia can choose to pay at instruction or defer, at no extra cost, to the earlier of ten months from the date of instruction or the date of sale. If a customer wishes to defer payment, they are required to use Purplebricks' conveyancing services for the sale.

Purplebricks charges £849 (inc. VAT) for a sale anywhere in the UK besides London and surrounding areas, where there is a charge of £1,199 (inc. VAT). There are additional charges if the customer wants Purplebricks to undertake the viewings on their behalf, if they require an energy performance certificate or a Rightmove premium display, amongst other services that are available.

The business model is low cost, flexible and cash generative, without the need for an expensive leased estate. LPEs are self-employed and receive a flat fee per instruction and can earn additional fees from the sale of ancillary services including, but not limited to, conveyancing, mortgage referrals and insurance.

Purplebricks listed on the Alternative Investment Market (AIM) in December 2015, raising £25m of growth capital before listing costs at 100p per share. In February 2017 Purplebricks raised an additional £50m (gross) through a share placing to fund US expansion.

This information is provided by RNS
The company news service from the London Stock Exchange
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