The Consumer Panel today published topline results of a snapshot survey it took on one Saturday earlier this year across all national and some regional newspapers into whether financial advertising complied with the rules.

The Panel research found a worrying level of breaches of the rules – overall 57% of financial promotions reviewed did not comply. Broken down according to the individual product areas, the percentage of promotions found to be non-compliant were:

• 79% of general insurance promotions;
• 47% of mortgage promotions; and
• 43% of investment promotions.
  

The Panel has pointed out to the FSA that advertising is at the heart of competitiveness between firms, and if some firms are seen to get away with stretching the rules, then others will follow. As there were 33 advertisements that were judged to be high or medium risk on one Saturday^* , this would suggest there are several thousand over one year. And yet the FSA only took direct action in 324 cases, choosing instead to use thematic work and assessment of systems and controls.

The Consumer Panel believes that the FSA should be able to take a similar approach to the Advertising Standards Authority (ASA), where all complaints are reported and the outcome of ASA deliberations made public, so there are much higher levels of compliance and the advertisers themselves are much keener to keep to the rules.

The Panel understands that FSMA (The Financial Services and Markets Act 2000) prevents the FSA from naming and shaming firms who have contravened the rules unless they have been subjected to the full enforcement procedures. We think that in this respect, the Act is not working in the interests of consumers, and would like to see the FSA empowered in a similar way to the ASA, to report and make public the outcome of all complaints.

The Chairman of the Financial Services Consumer Panel, John Howard said:

"It is a quirk of the set up that financial advertising is not covered by the ASA, and so consumers seem to get a worse deal, with the FSA offering no public scrutiny and pressure to make sure that advertisers keep to the rules in an area where it is all too easy to blind the consumer with seeming good news headlines. We would like this part of the FSA’s work at least to open up with public naming and shaming of the worst offenders in breaking the advertising rules.”

– ends –

MEDIA ENQUIRIES

1. The research was undertaken as a review of national press advertising on February 11th 2006 across all mortgage, general insurance and investment promotions. Executive summary of the findings.
   
   
2. The FSA established the independent Financial Services Consumer Panel in December 1998 to advise its Board on the interests and concerns of consumers and to report on the FSA’s performance in meeting its objectives. The Consumer Panel has statutory status.



3. The emphasis of the Panel’s work is on activities that are regulated by the FSA, although it may also look at the impact on consumers of activities outside but related to the FSA’s remit. More information about the Panel's work is available on our website – www.fs-cp.org.uk



4. The Consumer Panel brings together a wide range of relevant experience. This includes financial services regulation, working with vulnerable consumers, consumer protection, consumer education, front-line money advice, legal expertise, competition policy, public policy analysis, market research and media.



5. There are currently eleven members of the Panel as listed below (for further information on individual members, see the www.fs-cp.org.uk

John Howard (Chairman)
Adam Phillips (Vice Chairman)
Caroline Gardner
Harriet Hall
Tony Hetherington
Stephen Locke
Nick Lord
David Metz
Paul Salvidge
Robert Skinner
Carol Stewart