FSA warns insurers over advertising
The Financial Services Authority is coming down hard on insurance companies in a crackdown to try and eliminate false or misleading claims from these companies in advertising. Insurance companies have been warned that they have just a few months to review and where necessary to change their advertising, otherwise action may be taken against them for making claims that are misleading to the public.
The crackdown comes after financial regulatory bodies discovered that many insurance companies were offering big savings to customer when in fact the consumer could not actually make any saving, or at least not as much as the insurer claimed in the advertisement. These companies now have a deadline by which to sort out their advertising or face hefty fines and further action from the FSA.
The main culprit in making what often turned out to be unjustifiable claims was the motor insurance industry, with over half of motor insurance companies offering savings but not explaining how the savings were being made. The home insurance company also played a part in misleading advertising, although not on as high a level as motor insurance companies.
According to one spokesperson from the Financial Services Authority: "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."
The Association of British Insurers also expressed concern over the matter, and one spokesperson stated: "We take the FSA's concerns seriously. Offers must be accurate and deliver what the customer is led to expect. The ABI and our members will work closely with the FSA to achieve this."
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