Smart Pension Ltd, which carries out pension business including auto-enrolment, was investigated by the ASA after the watchdog was sent a letter headed “GET COMPLIANT IN MINUTES”, last November.

The letter went on to add: “Failing to set up your workplace pension now could soon blow a serious hole in company finances”.

The body of the letter included two paragraphs of information about workplace pensions.

Below that a box included the complainant’s company name and text that stated: “Is your deadline just days away?

“With Smart Pension, it takes just minutes to set up for free.

“Turn over to find out how”.

Below that the letter included body text which stated: “Why Smart Pension? Our platform is the fastest, simplest and most secure workplace pension on the market.”

The ASA said the complainant challenged whether the advert:

1. was obviously identifiable as a marketing communication;

2. misleadingly suggested it was an official communication, when that was not the case; and

3. was likely to cause undue distress, because they believed that the tone of the ad was threatening.

On points 1 and 2, Smart Pension Ltd said that the letter had been prepared following a previous ASA ruling against its advertising.

The firm provided a copy of the envelope in which the ad would have been sent.

It featured large text that stated: “New regulations - marketing communication from Smart Pension Ltd” and Smart Pension’s logo and its corporate name on the front of the envelope.

Smart Pension said that its communications were targeted at businesses with employees and it considered that those recipients would be “sophisticated individuals who would be likely to recognise the difference between their own correspondence and correspondence from official organisations.”

It said that the Automatic Enrolment and Legal & General Logos were included following the previous ASA ruling.

On point 3, Smart Pension said that it did not consider that recipients, being business owners, would be caused undue distress by the ad.

The ASA did not uphold points 1 and 2, but upheld point 3.

Outlining its decision the authority said: “The ASA understood that the letter was posted in an envelope that featured prominent text which stated ‘www.AutoEnrolment.co.uk New rules apply to all UK employers’ above the delivery address and ‘New regulations - marketing communication from Smart Pension Ltd’ below the delivery address, as well as featuring the Smart Pension and Automatic Enrolment logos.

“Although the first piece of text recipients were likely to read was ‘New rules apply to all UK employers’, we considered that the text ‘marketing communication from Smart Pension Ltd’ held equal prominence.

“The letter featured the Smart Pension logo and branding in the top right corner and the letter did not contain any official Government or similar organisation logos.

“Although the initial two paragraphs of the letter related to regulatory issues, we considered that the second half of the letter (opening with the sub-heading ‘Why Smart Pension?’) made clear that the aim of the letter was to advertise Smart Pension’s services.

“Taken as a whole, including the content of the letter and the envelope, we considered that the letter was identifiable as a marketing communication and that, although it did mention regulatory matters, it would not be understood by the average consumer to be an official communication.

“We therefore concluded that on those points, the ad was not misleading.”

Commenting on point 3, the ASA report read: “We acknowledged that it was the case that companies that did not set up a workplace pension for their employees could be subject to fines or legal action and we considered that it would not necessarily be problematic to reference that in an ad relating to the provision of such pensions.

“However, the ad opened with a warning that failure to set up a pension could ‘blow a hole in company finances’ and the first two paragraphs mentioned fines and prison sentences.

“We considered that the ad placed a heavy emphasis on those potential consequences for failing to set up a workplace pension, rather than on the potential benefits of using Smart Pension.

“Additionally we noted that the ad stated several times that time was limited for businesses to make their decision, for example, ‘If you haven’t taken action and put a scheme in place by your deadline, you need to act NOW.’

“We considered that those statements, taken together with the emphasis placed on the potential negative consequences rather than on emphasising the benefits of Smart Pension’s own pension, meant that the ad was likely to cause distress to recipients without justifiable reason.”

The ASA ruled that the advert must not appear again in the form complained of and warned the firm “to ensure that future ads did not cause undue distress to consumers.”

A spokeswoman for Smart Pension said: “We are disappointed and confused with the ruling from the ASA and are seeking an independent review.

"The communication in question simply stated that employers could receive severe penalties for not complying with their auto enrolment duties and highlighted the consequences of not doing so.

"The volume of enforcement activity from the Pensions Regulator recently shows that this is a truthful statement of fact.

“The ASA has seen previous versions of this communication, including the two paragraphs now in question, and has not raised any issue before.

"The communication has not been issued since January 2018 so there is now not even an issue to resolve."