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FSA has ramped up its focus on misleading advertising, resulting in a 32 per cent increase in the number of promotions withdrawn by financial services firms.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In the first quarter of 2011, 66 promotions were withdrawn, compared to 50 in the same period in 2010.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The Financial Times says promotions that were withdrawn include an advert for an investment fund that claimed a 30 per cent headline growth rate but buried risk warnings in the small print and a mortgage broker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.”