The UK’s Financial Services Authority (FSA) has issued a warning to insurance firms to stop using savings claims which could mislead consumers in their advertising or face regulatory action.
The FSA said the “warning from the financial watchdog follows a review of press advertisements from 57 firms selling motor, home and travel insurance and who accounted for more than three quarters of the press advertising spend in these areas during 2006.”
The FSA found that more than half of motor insurance advertisements with savings claims were either unclear or misleading. It also had the same concerns with a quarter of the home insurance advertisements. It did note, however, that, “travel insurance saving claims,” which have been a problem in the past, “were generally of a higher standard than the others.”
The FSA explained that “insurance advertisements can be misleading if they give the impression that most consumers are eligible for such savings when in fact only a few are. They can also be unclear if the basis of the savings claim is not clearly set out.”
FSA Retail Themes Director Vernon Everitt commented: “Most people rely on some form of insurance to protect them and advertising is a major influence on what they choose to buy. So it must be clear, fair and not misleading, leaving people with a balanced picture of what’s on offer. This work demonstrates that firms in the home, travel and car insurance markets must shape up and ensure that the claims they make don’t mislead. We will be back in three months to assess progress and will then decide whether further regulatory action is needed.”
The FSA has contacted the senior management of firms where it had concerns requiring them to improve the quality of their advertising and will repeat its review in three months’ time.
It review concluded that “savings claims” in home, motor and travel insurance promotions showed that:
— 57 percent of motor savings claim advertisements failed to provide any evidence as to how claimed savings would be achieved and;
— 25 percent of home savings claim advertisements failed to provide any evidence as to how claimed savings would be achieved.
Full details of the review and latest information on the FSA’s financial promotions regime including the 2006 progress report can be found in the Financial promotions section of the web site at: http://www.fsa.gov.uk.
Topics Carriers
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