The Panel has published topline results of a snapshot survey it took on one Saturday earlier this year across all national and some regional newspapers into whether financial advertising complied with the rules.
The Panel research found a worrying level of breaches of the rules – overall 57 per cent of financial promotions reviewed did not comply. Broken down according to the individual product areas, the percentage of promotions found to be non-compliant were:
• 79 per cent of general insurance promotions;
• 47 per cent of mortgage promotions; and
• 43 per cent of investment promotions.
The Panel has pointed out to the FSA that advertising is at the heart of competitiveness between firms, and if some firms are seen to get away with stretching the rules, then others will follow. As there were 33 advertisements that were judged to be high or medium risk on one Saturday , this would suggest there are several thousand over one year. But the FSA only took direct action in 324 cases, choosing instead to use thematic work and assessment of systems and controls.
The Consumer Panel believes that the FSA should be able to take a similar approach to the Advertising Standards Authority (ASA), where all complaints are reported and the outcome of ASA deliberations made public, so there are much higher levels of compliance and the advertisers themselves are much keener to keep to the rules. The Panel understands that FSMA (The Financial Services and Markets Act 2000) prevents the FSA from naming and shaming firms who have contravened the rules unless they have been subjected to the full enforcement procedures. The Panel thinks that in this respect, the Act is not working in the interests of consumers, and it would like to see the FSA empowered in a similar way to the ASA, to report and make public the outcome of all complaints.
The chairman of the Financial Services Consumer Panel, John Howard said: "It is a quirk of the set up that financial advertising is not covered by the ASA, and so consumers seem to get a worse deal, with the FSA offering no public scrutiny and pressure to make sure that advertisers keep to the rules in an area where it is all too easy to blind the consumer with seeming good news headlines. We would like this part of the FSA’s work at least to open up with public naming and shaming of the worst offenders in breaking the advertising rules.”
