- 24
- Nov
The Financial Services Authority is asked, again, to pay more attention to misleading advertising by financial services companies. This is the claim an MP made last Thursday.
Labour MP John McFall, chairman of the House of Commons Treasury Select Committee, said in a letter to the Financial Services Authority (FSA) that it is responsible to do more to address poor advertising practice among banks, insurers and other financial firms,
He said the FSA offered “no scrutiny and little incentive for advertisers to keep to the rules”.
The Financial Services Consumer Panel, which advises and monitors the FSA’s policies and activities, found a “worrying” level of breaches in advertising campaigns embarked on by financial firms. The trend is followed mainly by doorstep lenders, unsecured loan lenders, credit card companies, and IVA brokers.
The Panel’s survey showed that 57 per cent of financial promotions do not comply with advertising rules. This includes almost 80 per cent of insurance promotions and half of the mortgage and homeowner loan promotions. This translates to several thousand advertisements in the high or medium risk category each year.
The FSA had taken 12 enforcement actions against financial promotions in the last two years. These resulted in fines of 1.5 million pounds. It has investigated 820 cases of misleading advertising since April 2004.
“Where there’s a misleading promotion we do ask the firm to take immediate remedial action and either amend or remove that promotion, so there’s quite a lot of work going on in the background,” Abi Jones, an FSA spokeswoman, said.
She declined to comment on whether the regulator would want a relaxation in laws to allow it to name more offenders, or if it had yet responded to McFall’s letter.
McFall said the FSA should look at the Advertising Standards Authority model, which involves naming advertisers that break its rules and a clear record of its judgements, to assess whether any of its aspects would be useful in financial advertising.
