The FSA has increased its focus on misleading advertising, resulting in a 32 per cent rise in the number of promotions that have been withdrawn by financial services firms.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In the first quarter of 2011, 66 promotions were withdrawn compared with 50 in the same period in 2010.
RPC partner Jonathan Davies 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: “In future, a firm that disagrees with the FCA 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 FSA has fined 14 firms more than £1.5m since 2004 for promotion breaches.
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. The new powers proposed for the FCA would provide us with additional tools to strengthen this approach.”
Highclere Financial Services partner Alan Lakey says: “The FSA has a duty to look at the way in which the Money Advice Service is promoting its services. The use of the word advice devalues the service IFAs provide.”