Treasury select committee chairman John McFall has called on the FSA to name and shame firms falling foul of financial promotion rules.
In a letter to FSA chairman Sir Callum McCarthy, McFall says that the FSA should look closely at how the Advertising Standards Authority deals with firms that break the rules.
He quotes an ASA submission to the TSC that says its “primary sanction is adverse publicity for those advertisers that break the rules”.
Labour MP McFall says the current system, where the FSA asks firms to remove offending literature and comply with guidelines in future, is bad for consumers as there is no public scrutiny and it provides little incentive for advertisers to abide by the rules.
Last month, the FSA told a TSC meeting that it believed the best way of policing financial promotions is to ask firms privately to change any offending literature.
The ASA publishes the results of its investigations and records of its judgments on its website each week and provides the capability to have adverts checked for adherence to its code. In the past, the FSA has referred adverts to the ASA.
The financial services consumer panel says it is a “quirk of the set-up” that financial advertising is not covered by the ASA.
The FSA recently published a consultation paper on financial promotion rules under Newcob but continues to insist that companies must follow the principle of being fair, clear and not misleading.
McFall says: “How is the public to trust that enforcement is being undertaken in this area and how are companies to learn what is and is not acceptable?
“I would encourage the FSA to examine whether any aspects of the ASA model would prove useful in protecting consumers’ interests.”