FSA threatens insurers with action on savings claims

by Daniel Farey-Jones, Brand Republic 17-Jan-07, 07:00

LONDON - The Financial Services Authority has contacted several insurers to warn them to stop using misleading savings claims in their advertising and has given them three months to mend their ways or face regulatory action.

The FSA singled out motor insurers as the worst culprits, having found that more than half of their ads with savings claims were misleading or unclear.

Its study focused on direct response press ads from 57 firms selling motor, home and travel insurance.

It believes insurance ads 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.

A quarter of the home insurance ads gave cause for concern, but the FSA decided the travel insurance ads were generally of a higher standard.

Vernon Everitt, retail themes director at the FSA, said: "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."

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