Over three quarters of financial services promotions in the UK are misleading and fail to comply with guidelines set by the Financial Services Authority, according to financial advice company Grant Thornton.
A review of 117 promotions reviewed by the company, which advises businesses on how to comply with FSA rules found that 76% do not meet the criteria set by the agency. The research found significant flaws in 84% of all retail investment promotions and 81% of mortgage promotions. Insurance advertisements and promotions fared slightly better with 61% being found deficient.
Misinformation on the adverts included: advertising headline-grabbing deals that are not available; claiming premiums are cheaper by making a comparison on a more comprehensive but more expensive product offered by a rival and ignoring risk warnings such as the stock market can go down as well as up.
Ian Gorham, a partner within Grant Thornton’s financial markets group, said: It is absolutely critical that the industry takes the FSA requirements more seriously. Companies must ensure that more balanced messaging is used in their advertising – it is still possible to advertise a product effectively while using a fair description of it.
The FSA has fined companies for misleading advertisements in the past. In November 2005 the agency fined an independent financial adviser GBP60,000 for misleading pension adverts.