Misleading financial services adverts
Accountants Grant Thornton claim that 76% of the 117 ads it examined failed the standards set by the Financial Services Authority (FSA). The research was conducted by visiting at random branches of financial services companies, including high street banks, building societies and insurance firms. The available literature and promotional material was then checked against the FSA standards. Grant Thornton said that "advertisers need to play by the rules and not exploit a lack of awareness among their target market."
The following misleading points were highlighted by the report-
- Advertising "headline grabbing" deals or cheaper premiums which were not available in practice, with more expensive premiums quoted when the organisation was telephoned.
- Saying premiums were cheaper than a competitor's by comparing a basic product with a rival product that offers a more comprehensive cover.
- Using scare tactics such as 'one out of three people will get cancer in their lifetime', but failing to point out that some forms of cancer are not covered.
- Omitting obligatory warnings, such as income will be subject to tax or that values of funds could go down as well as up.
- Making claims that are untrue or improvable, such as claiming products offered "the best rates" or "mortgage rates are at their lowest for years", when rates have risen since 2003.
- Using jargon to confuse consumers, such as MVR, LTV, IVA, CCJ and descriptions such as "core plus satellite".
FSA regulations require companies advertising financial products make sure that their adverts are clear, carry risk warnings, don't make misleading claims and spell out any penalties or charges that may be incurred. Last month, the FSA said it was keeping a close eye on insurance advertising, especially for critical illness polices. It pointed out that too often these use scaremongering tactics about the prevalence of illnesses like cancer, and include unsubstantiated claims or use key words or exclusions that are not prominent enough. The FSA warned that if the problems continued it would not hesitate to take action.
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