Smart Pension is seeking an independent review following backlash from the Advertising Standards Authority (ASA) about a letter it sent to businesses about auto-enrolment.
The ASA ruled that the letter, which advertised Smart Pension’s services and listed the consequences for firms of failing to introduce a workplace pension, should never again appear in the same "threatening" form.
The ad, received by a business in November 2017, had opened with a warning that failure to set up a pension now could soon "blow a serious hole in company finances" with the first two paragraphs mentioning fines and prison sentences.
The ad stated several times that businesses had limited time to make their decision on the provider they want to use, adding: "If you haven’t taken action and put a scheme in place by your deadline, you need to act NOW."
The ASA said while it was not problematic to reference consequences of not complying with auto-enrolment, the letter was "likely to cause distress to recipients without justifiable reason".
It also found the ad had placed heavy emphasis on the consequences of failing to set up a workplace pension rather than on the potential benefits of using Smart Pension.
The ASA ruled the ad was in breach of its harm and offence rule, saying it should not appear again in the same format and that Smart Pension should ensure future adverts do not cause undue stress.
Smart Pension however, has defended the ad, saying it had included "true statement of fact". The firm plans to seek an independent review into the ASA’s decision.
A Smart Pension spokesperson 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."
It added: "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.
"Our team works hard to develop engaging, informing and compliant marketing communication materials to aid employers to meet their legal duties under government legislation."
Auto-enrolment was introduced in 2012 and all businesses were required to have their workplace pensions set up by April 2017, with all new businesses having to have schemes set up by February 2018.
During the whole of that year, 2017/18, the value of fines issued by TPR more than tripled to £42m, from £12.6m in the previous year. This was largely due to the high volume of employers reaching their auto-enrolment staging date that autumn.