MP urges tougher stance on financial ads
The Financial Services Authority should take a far more robust approach to misleading advertising by financial services companies, an influential MP said on Thursday.
Labour MP John McFall, chairman of the House of Commons Treasury Select Committee, said in a letter to the Financial Services Authority (FSA) that it should do more to highlight poor advertising practice among banks, insurers and other financial firms,
He said the FSA offered "no scrutiny and little incentive for advertisers to keep to the rules".
The Financial Services Consumer Panel, which independently advises and monitors the FSA on its policies and activities, in July said it had found a "worrying" level of rule breaches in advertising by financial firms.
The Panel said a snapshot survey showed 57 percent of financial promotions did not comply with advertising rules, including 79 percent of general insurance promotions and almost half of all mortgage promotions. It said this indicated several thousand advertisements were of high or medium risk each year.
The FSA said it had taken 12 enforcement actions against financial promotions in the last two years, resulting in fines of 1.5 million pounds, and since April 2004 it had pursued 820 cases of misleading advertising. It is prevented from naming firms unless it has gone through a full enforcement procedure.
"Where there's a misleading promotion we do ask the firm to take immediate remedial action and either amend or remove that promotion, so there's quite a lot of work going on in the background," Abi Jones, an FSA spokeswoman, said.
She declined to comment on whether the regulator would want a relaxation in laws to allow it to name more offenders, or if it had yet responded to McFall's letter.
McFall said the FSA should look at the Advertising Standards Authority model, which involves naming advertisers that break its rules and a clear record of its judgements, to assess whether any of its aspects would be useful in financial advertising.
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