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ASA ruling does not excuse dangerous “free advice” message

It was, perhaps, always a long shot that the Advertising Standards Authority would find the Money Advice Service’s recent controversial advert had breached its rules.

As the ASA had already rejected some of the more subtle but important concerns expressed by advisers and others who complained about the ad, and pressed ahead with a very narrow investigation, we were not holding out too much hope.

To refresh memories, it is the following extract from the advert  which caused the greatest offence. “Our advice is independent and unbiased. Oh, and it’s free. How is that for a breath of fresh air?”

It is hard to believe that the industry-specialist advertising executives charged with putting together this advert were not aware of the significance of the wording used.

Likewise, it is hard not to see the “breath of fresh air” comment as a deliberate dig at the IFA sector which currently offers unbiased and independent advice to the Great British public.

The advert also contradicts the FSA’s stated RDR goal of ensuring people understand that the advice they receive comes at a price.

Debate over whether consumers understand the charges levied on them have dominated discussion on this website over the past few days. The message sent out by this advert only muddies these waters further.

The Government’s decision to brand the service as “advice” is obviously the source of all subsequent concerns. If you are offering advice you should be prepared to take responsibility for it yet, as a lengthy disclaimer on the MAS website makes clear, it takes no such responsibility.

Though the ASA decision shows the advert has not broken any rules, the tone and language used created a dangerous misconception.

Increasing the financial education of the public is a worthy aim worth pursuing but MAS should be working with the industry rather than concocting marketing campaigns which appear designed to belittle it.

MAS must forge a more productive relationship with the people who pay its wages in future if it is to be a success.

Paul McMillan is the editor of Money Marketing- follow him on twitter here


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There are 15 comments at the moment, we would love to hear your opinion too.

  1. Excellent summary Paul; wish you were at the helm of the FSA!!

  2. Excellent article. Consumers who see this ‘advert’ will not want to pay for advice from IFA’s but will probably go to Banks and BS as no dobt this is what the FSA wants

  3. I think it’s time we all faced up to the fact that there is a hidden agenda to put IFAs out of business. This has been going on subtely for a number of years now and the pace has increased in the lead up to RDR.
    I can’t think why the powers that be would systematically destroy a sector of business like this but I am sure that this is the intention.
    Then, when we have all gone, they will (maybe) miss us and the good value we provided to clients at a resonable cost.

  4. “MAS must forge a more productive relationship with the people who pay its wages in future if it is to be a success”
    therein lies the crux of the matter. MAS has no need to do so. Unlike every other consumer who has choice in this life,, we must pay for this whether we like/agree with it or not.
    I am sick to the back teeth working 24/7 to pay a large proportion of what I earn to keep others in their own little bubble.
    Nothing in life or in financial services is FREE and the sooner the public is educated to this fact the better

  5. The decision of the ASA does not surprise me but that does not make the decision right (or good). The public will not receive advice from MAS and they might perceive this as the same service they would get from an adviser, but ‘free’!

    The MAS advert is not transparent or fair to consumers. Perhaps the FSA should investigate (itself!)

    On a final note, in response to an earlier commentator, I do not think that the regulator has a hidden agenda to get rid of all IFA’s – but sometimes, by not admitting its mistakes, this is the message that comes across.

  6. We keep hearing that many people are underinsured, not saving enough, and not investing for their retirement. It has never been easier to obtain life cover (internet, supermarkets etc) and yet the situation is still the same. Who makes a difference? WE DO. And yet we all seem to be under attack. I am sure most IFA’s will provide one hour with any prospective client with no fee and do a better job than the MAS. This campaign by the MAS just puts people off.

  7. Nice to see ASA are on the ball as they banned a TESCO advert for sausages as they felt it missled consumers !!!

  8. The ASA will pull an ad on the flimsyest of reasons, but no doubt, having had their arm twisted by the Financial Stazi Autority they rolled over.

  9. Having been one of the complainants, I have had three letters from the ASA which were a farce, just goes to show that all these quango’s are destroying our democracy and the truth, I wonder if this is creeping Communitarian law at work! Unelected unaccountable people are running a layer of Government without personal responsibility funded by the general public ultimately. The FSA being the worst.

  10. I am not sure that I agree with the general perception expressed by J Gamble that “there is a hidden agenda to put IFAs out of business”. The process is more in line with the statement “the tone and language used created a dangerous misconception”.
    By concentrating on self flagellation IFAs are allowing the FSA to break the industry through good intentions, and thoroughly stupid implementation. I do not disagree that the end result could well be the end of IFAs, but only because it is leading to a total breakdown in the mechanics of the financial market.
    The vast majority of IFAs accept the underlying concepts of RDR, even though it is based on unproven assumptions, so they are really little more than good intentions – just as the Money Advice Service is based on a “good intention”. But how often do “good intentions” produce the opposite effect to those intended?
    And that is what is happening here. At no stage in the development of the FSAs plans for RDR has there been any serious analysis of the real life effect of their proposals.
    It is difficult to know if the FSA are so totally absorbed in their own infallibility that they do not bother to listen to the outside world; or that the level of criticism arising from their plans has created a classic Group Think process, were they shut out external criticism because they have no means of dealing with it.
    Having the whole of RDR starting on one specified day will, I believe, will be viewed historically as one of the stupidest decisions ever by any Regulator. There is no indication that the market wants it; there is no evidence that it will provide any improvement; the only thing that will be seen is that the FSA changed the market to reflect their Regulatory Structure rather than adapting the regulatory structure to the market. There will be no way to determine what succeeds and what doesn’t. It’s just one big experimental stew.
    The Money Advice Service should be a useful part of market development (though I would question the use of the word advice), but in reality it is a another disparate part of a fracturing market.
    And I believe this arises from the fetish over the words advice and adviser. In any other walk of life there are two basic options – taking advice or just buying. If you want to buy a computer you have the option of reading a few magazines, talking to friends and colleagues, and arriving at a decision that may or may not prove to be inspired. Or you can walk into PC World, point at the red computer and say “I want that one”.
    Financial products are not event the biggest purchase in a person’s life. That is more likely to be property, either as home or investment. And that can be done without the need for any advice. In theory one can even do one’s own conveyancing.
    Try buying any financial product without advice. Try doing one’s own genuine financial research. If you are not an IFA most financial web sites put up massive “There be Dragons Here – Do Not Enter”. So the public are denied access to a vast range of information. Why? Because the FSA say so. I have never found anything in those sites that would be harmful to consumers – other than being bored with the sheer inanity of most of it, so why are the FSA being so prescriptive. This is Nanny State gone mad – and has anyone noticed any beneficial effect. But they can launch their own Advice Web site that is obviously without fault. So the consumer is being protected from themselves by an institution that has presided over some of the worst financial scandals of the last 100 years, and been shown to be in ignorance in each and every case. Does no-one else consider this to be dysfunctional?
    The market is now being driven by fear and dysfunction. It is no longer a competitive arena. It is administratively incompetent. It is no longer particularly innovative, except in the way it is able to create hidden income streams.
    Value for money? Please refer to Matthew Vincent’s article in FT Money 30 July 2011 in which he lays out some facts from a report by Insch Capital Management, e.g. ” 25.7% of the funds made more in fees for the manager than they did for investors in the (10 year) period.”
    There are massive problems in the UK financial services industry that are not being addressed. Why? My belief is that the FSA mainly, and the media to a degree, must hold up their hands because they have concentrated on intellectually and functionally easy targets. The FSA indicate that poor advice could cost consumers £500m a year (I will ignore the fact that they do not subject the figure to external audit). That is approximately the fee stream that Invesco Perpetual take from the consumer for their unit trusts, a TER of about 1.61%. And Invesco are but a fraction of the market. So what is the detriment cost as a percentage of the total financial market. Would vanishingly small be an accurate comment?
    But that is what the FSA concentrate on, rather than the Trillions that disappeared in 2008. Or the lack of competition in the financial services market. Or the appalling administration that has bedevilled financial institutions for decades.
    What we really need to solve is the conundrum of a Web site that gives free advice, and avoids the fact that consumers cannot buy most of the products without another level of advice that they will pay for.
    The FSA have made dysfunction into an art form.

  11. @gassa 10.18 hrs
    Sorry, I absolutly disagree with your remark that they are not out to destroy the IFA.. it is blatently obviouse that they are and have been for over 17 years. CP121, (de) polorisation?, the menu, now RDR. they want to give the banks the market share that we have enjoyed for so many years. RDR will allow them to achieve that end.

  12. I just wanted to post that, like rodl, I wrote to the ASA and also got three form letters from them which all failed to address any of the points I actually made. The ASA was perfectly satisfied on the points I didn’t raise, so as far as they were concerned all was well.
    I also agree with him the FSA’s agenda to destroy the IFA sector has never been hidden at all. They just lie about it.

  13. A well written article from Paul McMillan and very valid comments from Glen.
    I don’t know that there is a conscious aim to get rid of IFAs by the FSA.
    I attaneded a very good FSA RDR seminar at Bath racecourse yesterday and found the FSA presenters honest and genuine and truly trying to help, but us Glen said, good intentions don’t neccessarily make good outcomes or achieve justice.
    The FSA presenters might be surprised at me commenting on hear publicly praising their efforts as I was very vocal and critical and made sure that the Longstop was highlighted as a serious ethical issue where the FSA have failed to be the open and honest regulator they claim to be as there was never any public discussion with IFAs about teh removal of the longstop from the handbook and the first most knew about it was reports from IFAs who had claims upheld against them in excess of 15 years. I only know becuase others told me (as I’ve never had a complaint about me at the FOS although I have helped clients with plenty against banks and insurers)
    I like writers above had the same fob off letters from the ASA. I was not expecting otherwise, but if we failt o make complaints we give tacit acceptance.
    The MAS could be very good for the industry and consumers, but it has started badly with lying adverts which contradict the facts as Glen says. That is a bad start and they had the chance to correct matters when the flaws were brought to the attention of the ASA, but have decided they know better…..
    At least those who have complained can have the satisfaction (as with stakeholder) of saying “I told you so”. and that’s not to say I have not arranged stakeholder pensions (inlcuding group schemes for employers), nor that I will not reccomend NEST to the right employers and their staff, just that these are not solutions, they are plasters when a first field dressing/bandage was needed.

  14. In my correspondence with ASA I made the following points inter alia::

    “The front page of your web site says, “We work to ensure ads are legal, decent, honest and truthful by applying the Advertising Codes.” My main point remains that the advertising of which I complained appears to break the law.

    You concede that the advertisement claims to offer advice about money. Surely it is not then credible for you to claim, as does your letter and enclosure, that the advertisement does not claim to give financial advice.

    You have made the point that MAS provides information and not advice. Information cannot be called advice, yet the ad. uses “advice,” with the conceded claim that it is independent and unbiased. To offer independent financial advice without being registered and authorised by the FSA is a criminal offence under the FSMA.”

    My opinion is that the ASA decision has been a whitewash.

  15. IFAs are crazy if they think the MAS TV ad ‘free’ gag is a direct dig at them. It’s a TV ad – when was the last time you saw an IFA advertise on the TV? Surely its aimed at banks? MAS advice is free because its not very detailed, and surely by encouraging people to start thinking about their finances in a structured way may help turn formerly transactional clients into ones seeking better, more continuous advice?

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