FSA clamps down on misleading advertising
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The FSA has ramped up its focus on misleading advertising, resulting in a 32 per cent increase in the number of promotions withdrawn by financial services firms.
A freedom of information request from law firm Reynolds Porter Chamberlain shows insurers, financial advisers and banks withdrew 262 promotions in 2010, up from 199 in 2009 following enquiries from the FSA.
In the first quarter of 2011, 66 promotions were withdrawn, compared to 50 in the same period in 2010.
RPC partner Jonathan Davies (pictured) says the regulator is sharpening its teeth in advance of gaining new powers of intervention when it morphs into the Financial Conduct Authority in 2013.
He says: “Giving equal prominence to risks and rewards is a very judgemental concept, on which reasonable people can easily disagree. The FSA is increasingly forcing its view on firms.
“In future, a firm which disagrees with the FCA, which will be regulating this area once the FSA is replaced, will be named and shamed before the disagreement can be resolved by an independent tribunal.
“Businesses will be particularly concerned about the naming and shaming powers the FCA will have because the reputational damage that could follow a disagreement with the FCA will be very high indeed.”
The Financial Times says promotions that were withdrawn include an advert for an investment fund that claimed a 30 per cent headline growth rate but buried risk warnings in the small print and a mortgage broker website that failed to disclose fee information.
The FSA has fined 14 firms more than £1.5m since 2004 for promotions breaches.
Speaking to the Financial Times, FSA head of conduct risk Nausicaa Delfas says: “One of our regulatory requirements is that firms’ financial promotions must be fair, clear and not misleading.
“We take a tough stance on this, in line with our more pre-emptive and interventionist approach – anticipating potential consumer detriment where possible and stopping it before it occurs.”
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Readers' comments (15)
Rod | 22 Aug 2011 8:59 am
Hypocrisy at its best FSA.
Free financial advice that is neither free nor advice! get a grip you are your own worst enemy!
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David Summers | 22 Aug 2011 9:02 am
That is the best laugh I have had in ages. The FSA are clamping down on misleading advertising, however they are quite happy with the Money Advice Service advertising that offers Free and Independent Financial Advice!!!
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Keith Jayne | 22 Aug 2011 9:06 am
Great idea.
Start with the 'Money Advice Service'....
You couldn't make it up.,,
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Paul Nash | 22 Aug 2011 9:24 am
Once again, quite unbelievable hypocrisy from the Clowns in Canary Wharf.
Have you asked the Money Advice Service to withdraw their advertisment yet?
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Anonymous | 22 Aug 2011 9:30 am
Two sayings spring to mind:
It sounds like "the kettle is calling the pot black"
and "Regulators (sic) who live in a greenhouse shouldn't throw stones".
Incidentally, talking about the FSA's particular 'greenhouse' (Canary Wharf) wouldn't our regulatory fees be an awful lot less if the FSA didn't occupy some of the most expensive real estate on the planet???
(The MCCB fees were very reasonable - anything to do with their being based in Stoke, perhaps?)
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andy newman | 22 Aug 2011 9:31 am
1st August RPC appoints new Marketing PR director and proceeds to flood the meeja with non news stories puffing the services of RPC. I call on journalists not to be taken in with these non stories, FOI information and surveys are always a giveaway. Hey, perhaps the FSA should replace current PR adviser Ronald McDonald and speak to RPC.
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steven Farrall | 22 Aug 2011 9:41 am
This has all been tried before. It's called communism/fascism/nazism/totalitarianism.
It failed.
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Peter Herd | 22 Aug 2011 10:04 am
Have recently complained to the FSA and Advertising Standards Comission about the Money Advice Service adverts in relationship to the following:
This is an information service and NOT ADVICE as the name suggests.
As no advice is given how can it be free?
The information provided is not backed with a government guarantee.
All of the above points have been raised by myself with the FSA and the ASC but needless to say the comments coming back have been nothing short of a whitewash.
I support greater regulation in the field of advertising as we recently ran a campaign against the Chesea Building Society for the following misleading advert http://essentialifa.wordpress.com/2010/11/18/chelsea-building-society-misleading-18-capital-protected-bond/
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Anonymous | 22 Aug 2011 10:16 am
Whilst the prospect of naming and shaming before any dispute is resolved is worrying, if not at all unexpected. What real effect will it have on Joe Public and reputations? Most people who have ever heard of the FSA think it is to do with Food and everyone I meet, inside and outwith Financial Services who know who they are hold them in compllete and utter contempt. Why will the FCA be any different?
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gaazza | 22 Aug 2011 11:22 am
Notwithstanding the ridiculous situation with the MAS advertising, the FSA's Financial Promotions team overall do a good job. Too many firms would be only too pleased to mislead, deliberately or unintentionally, consumers. Our industry should welcome this part of the regulator's activities.
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