FSCS mulls plans for ‘FSCS protected’ badge for investments

The Financial Services Compensation Scheme has set aside £3.6m for consumer awareness projects ahead of plans which could see the organisation focus on investment products for the first time and launch an ‘FSCS protected’ badge.

Options as part of its consumer awareness work include TV programme sponsorship and radio advertising, potentially with the use of celebrities, and a new ‘FSCS protected’ badge on firms’ marketing materials. Programme sponsorship, which is not expected to be in place until next year, will be subject to board approval.

The total FSCS budget for consumer awareness for 2014/15 is £3.6m. The FSCS set aside £3m for consumer awareness for 2013/14, as part of an overall £3.6m budget spread over 15 months.

The FSCS’ Icons of Protection’ campaign, which has been running since August, features the BBC’s Sherlock actor Benedict Cumberbatch.

Campaigns are paid for by the relevant industry sector as part of the FSCS management expenses levy.

In the past advisers have criticised the FSCS for its spend on marketing. The FSCS scrapped a £4m advertising campaign in September 2011 after admitting it did not have the desired impact on consumer awareness.

In what will be its first departure from deposit protection campaigns, the FSCS is looking at ideas for how to promote FSCS protection on insurance, and later investment products.

The FSCS is in discussions with industry bodies including Apfa over the best approach to take on investments.

The FSCS is set to launch the “FSCS-protected” badge – which will differ from its logo and aims to give consumers confidence in the same way the ATOL logo does for holidays – later this year on deposit takers’ promotional materials. It may later extend it to investment firms. 

FSCS chief executive Mark Neale says: “We need to move on from raising awareness of deposit protection.

“But the messages on investments are much more complicated – it is not as straightforward as saying your deposit is protected up to £85,000. That is why we want to engage with the industry.”

The £3.6m total budget for consumer awareness includes £3.1m for advertising, as well as £320,000 on industry stakeholder work – which includes developing the badge – and £180,000 on PR.

Apfa director general Chris Hannant says: “Big expensive advertising campaigns are not appropriate for the FSCS.

“The best approach is to develop materials that advisers can incorporate easily into their communications with clients.

“Care needs to be taken with the badge to ensure clients do not think investments are risk-free.”


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. More expense. More printer ink. New brochures etc for what exactly?

    This makes no sense at all! Clients will consider something like that to mean that if anything goes wrong they will just get their money back.

  2. This is over £3 million of our money that could be used for the purpose that the FSCS was established, namely to compensate consumers in the event of regulated firms and individuals going into default.

    We all carry information about the FSCS scheme and its limitations in our key information disclosure documentation as do product providers, to spend more money telling people is a wanton waste in my view, but then again, when you can simply up the budget as it suits and firms are enforced to meet this cost, what the heck, spend what you like pretty much how you like hey!

    Outlining how the money is going to be spent does not justify it!!

  3. Wont this make people think that all of their money is safe when clearly it isnt.

  4. Derek Bradley ceo Panacea Adviser 19th February 2014 at 4:32 pm

    “Care needs to be taken with the badge to ensure clients do not think investments are risk-free.”

    Has the FSCS completely lost sense of reality and run out of plasticine to play with?

    Over a considerable number of years ‘Consumer detriment’ has been seen because the regulator has noted flaws in product design, marketing or understanding of outcome and purpose- and yes you have guessed it, all with the benefit of hindsight.

    Regulation should be about being smart and not wise after the event. It should be about utilising experience when things going wrong to make sure mistakes and failures do not happen twice.

    Those ‘Manufacturers’ of product are in business to make a profit and that profit can be made quite ethically and honestly, but there is an overwhelming feeling that our regulator just doesn’t understand the markets it purports to regulate.

    To licence a product as fit for purpose, with that purpose clearly defined, as part of the process is the single most effective consumer benefit a regulator could put in place.

    It is the CAA equivalent of being fit to fly, it is the Food Standards Agency equivalent of safe to eat, it is the VOSA equivalent of saying your car is safe to drive, it is the MHRA saying a drug is safe to ingest.

    This decision is nothing to do with resource, it is to do with responsibility and who the finger points at when things go wrong. We should remember that as Sants pointed out at the TSC hearings if responsibility fell upon the shoulders of those at the FSA, nobody would want to do the job.

    A regulator cannot rely on someone else to do the job, and then get him or her to take the blame when it all ends in tears because they did not have the “resource” to do what was right.

    Some have suggested that the resource needed would result in a huge increase in fees, perhaps the contra view that because products are licenced there would be fewer failures to fund might be more appropriate.

    In any event, the FSA and FCA has never found it difficult to raise money to fund its activities, in fact when it runs out, even after ‘anomaly overcharging’ of advisers for a number of years, it just goes to the very banks it regulates to raise the money then bills those it regulates to pay it back.

    I am sure that this will generate a lot of debate, perhaps an FCA justification could read “through being inefficient, incompetent and frightened to take any responsibility whatsoever for the consequences of our own actions we are not going to effect product pre-approval” and so are handing back the keys of responsibility to you.

    Licence the product not badge the compensation. In doing so the wrong message is being sent by the FSCS to consumers in every possible way.

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