Market failing to react to Financial Promotions guidelines
The study revealed 76 per cent of the 117 advertisements it examined failed to comply with FSA guidelines, with specific failings in the areas of price comparisons and a failure to warn against the risks of the particular product. The study also highlighted concerns that many firms were using scare tactics, omitting obligatory warnings, using confusing jargon, and making claims that were misleading or untrue.
Such issues have been highlighted as part of a Mortgage Introducer ‘Promoting the Standard’ campaign, but the report revealed the sector has still not got to grips with regulation surrounding financial promotions.
Speaking to the BBC, Ian Gorham, partner at Grant Thornton, commented: ‘Companies appear all too eager to inform potential customers of the benefits of their products without outlining the finer details of the risks involved.
‘Advertisers need to play by the rules and not exploit the lack of awareness among their target market.’
Alan Lakey, partner at Highclere Financial Services, added: “I would have thought the 76 per cent does not represent people who have just said ‘I won’t follow the guidelines’. Instead I think many of these can’t understand the FSA rules, or have found it hard to interpret them.”
David Whitely, press officer at the FSA, confirmed it was looking at the area of Financial Promotions, and welcomed industry feedback. He said: “Consumers and firms can play an important role in bringing misleading promotions to our attention and we would welcome details of any of the promotions identified in the Grant Thornton research, or any other promotions consumers or firms feel are unfair, unclear or misleading or break financial promotion rules.
“Financial Promotions are a priority area for the FSA. A consumer’s initial impression of a product can inform subsequent decision-making to a great degree so it’s important firms produce promotions that help consumers make the right choice about the right product at the right time.”