Treasury Select Committee chairman John McFall has called on the Financial Services Authority to take a more robust stance on misleading financial advertising.
McFall has written to Sir Callum McCarthy, chairman of the FSA, outlining his concerns that the regulator gives too little detail about which banks and insurers are being investigated for breaking the rules.
He points out to McCarthy that the Financial Services Consumer panel is on record as having called it “a quirk of the set-up” that financial advertising is not covered by the Advertising Standards Authority, and research by the consumer panel has found a worrying level of non-compliant advertising.
McFall says: “This means consumers seem to get a worse deal, with the FSA offering no public scrutiny and little incentive for advertisers to keep to the rules. The FSA needs to take a far more robust approach by highlighting poor practice.”
The ASA has told the Treasury Committee that its “primary sanction is adverse publicity for those advertisers that break the rules.”
McCarthy points out that the ASA publishes the results of its investigations, explaining why it has found for or against certain advertisements.
He says: “Its website provides a clear record of these judgments. The ASA regime also provides the capability to have advertisements checked for their adherence to the code.”
McFall adds: “At the moment, the FSA has a seemingly far less transparent system in regard to financial advertisements with no publication of complaints, and little public record of which companies have broken the rules.”
But Terry Pritchard, consultant at Case Consulting, says that the FSA should be given its chance to police financial advertising.
He says: “The industry is not working on a level playing field. There are firms out there that are not following the guidelines and disadvantaging those that are because their propositions look better.
“The FSA should be given its chance to fund and complete its policing of the sector correctly.”