FSA to rein in insurer and mortgage broker work

by Joanna Bowery, Marketing 09-Aug-06

The Financial Services Authority (FSA) has pledged to target insurers and sub-prime mortgage brokers in a crackdown on misleading advertising.

Standards of promotion in the general insurance and sub-prime mortgage
sectors, which targets people with poor credit ratings, showed little
improvement between 2004 and 2005 compared with other financial

advertising, according to the FSA.

General insurance ads were criticised for scaremongering, using
misleading and unexplained jargon, failing to describe products properly
and making misleading comparisons between products. Promotions by
sub-prime mortgage brokers were highlighted for often failing to include
or correctly calculate the annual percentage rate (APR). They were also
accused of not giving enough prominence to risk warnings or failing to
display correct fee-disclosure information.

The Association of British Insurers and the Council of Mortgage Lenders
backed the FSA. 'We have done work for our life-insurance members on
best practice in promotions and plan to expand this to our general
insurance members,' said a spokesman.

The FSA warned that advertisers of equity-release products, Child Trust
Funds, venture-capital trusts, spread betting and tip sheets should also
improve their activity.