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Promotions of sub-prime and GI firms found wanting

Promotions in the general insurance and sub-prime mortgage sectors are still not up to scratch and need to be improved, according to an FSA report.

The report evaluated nearly 1,000 financial promotions to assess industry progress in firms across financial services to gauge any progress made over the past two years.
The number of investment promotions which fell below the regulatory standard has dropped from fifty two per cent in 2004 to 32 per cent in 2006. Equity release and lifetime mortgages promotions have also improved.
But the FSA says it has seen limited improvement in the standard of promotions in the sub-prime and general insurance sectors where it says firms are continuing to make no attempt to issue fair, clear, not misleading promotions.
Common failings identified in 2005 included the omission of the annual percentage rate, incorrectly calculated APR, APR not being prominent enough, lack of or inaccurate risk warnings, risk warnings not being prominent enough, and lack of or incorrect fee disclosure information.
FSA retail themes director Vernon Everitt says while a shift away from detailed rules to a more principles based approach will allow firms more flexibility, responsibility to put in place the right checks and balances to ensure customers are being treated fairly lies squarely with senior management.
He says: We continue to see variations in standards across different sectors, but overall we have seen improvement over the last two years. The marked reduction in advertisements presenting a high risk to consumers is particularly encouraging. But we must see further progress.”

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