IFA Towry Law has accused Virgin Direct of misleading investors with its latest ad cam- paign for its Growth Pep.
The ad carries a list of all the rival Peps which have outperformed Virgin's Growth Pep in all three years since Virgin launched in 1995. The list from one to 99 is empty.
"Well you get the picture," says the ad. "Not one Pep has consistently outperformed the Virgin Growth Pep in all three years since its launch in 1995."
At issue is the use of the words "in all three years". If the sentence is changed to "over three years", Virgin slips down the table to 12th place and tumbles to 83rd for the calendar year 1997, according to figures compiled by Towry Law associate director Charles Levett-Scrivener.
He says: "What the small print makes clear is that they are not claiming that they are the top performer over three years but instead that, over the three time periods selected and printed in the small print, that no Pep managers outperformed them in all three periods. I find it puzzling. The Virgin index tracker has had more than sat- isfactory performance. So why manipulate the statistics? It is an excellent example of lies, damned lies and statistics."
Levett-Scrivener says, on a simple compound basis, the Virgin Pep is 12th in its sector. But he adds that Virgin's basis of comparison applies the bid/ offer spread for each of the three one-year periods, the assumption being that the investor would pay the initial charge three times. "This, of course, gives a highly flattering comparison to Virgin," he says.
"A fair comparison would state that, over the first time period, Virgin Pep was sixth but 43rd over the second time period and 83rd over the third time period, which makes Virgin's statistics completely invalid."
But Virgin product development manager Martin Campbell says: "Our ad makes it quite clear that we are talking about each year. If we had meant 'over the three years' we would have said so. This looks like an IFA who has made a hobby of monitoring Virgin and taking any opportunity, no matter how tenuous, to have a go."
In an escalation of Virgin's confrontational approach to rival companies, Campbell accuses six major investment houses – Fleming, Threadneedle, Fidelity, Edinburgh Fund Managers, Gartmore and Guinness Flight – of running ad campaigns which use bid-to-bid or offer-to-offer figures "hiding the real impact of charges".
He adds: "We are happy to answer any complaints about any of our advertising. While we cannot guarantee that we will always be perfect, given that so many major providers make day-to-day use of these dodgy tactics, it does seem a bit rough to be singled out – particularly by an IFA."