Signs of improvement in sub-prime mortgage and general insurance financial promotions are 'limited', according to the Financial Services Authority (FSA).
The FSA has published a report detailing its financial promotions work over the last two years, including an evaluation of industry progress and an outline of future plans in this area.
The regulatory body evaluated nearly 1,000 financial promotions and found, on the whole, there has been a drop in the number of promotions regarded as high risk to consumers.
But while the number of investment promotions which fell below regulatory standards has dropped from 52% in 2004 to 32% in 2006, there have only been “limited” improvements in the general insurance and sub-prime mortgage sectors.
In the insurance sector, the FSA says a high number of promotions are failing to meet the standards required in relation to price claims.
For example, it has seen many promotions which indicate or imply a firm can reduce the premium, provide the cheapest premium or reduce the consumer’s costs through price-matching or claimed savings.
In the sub-prime mortgage sector, the regulator says it continues to see many firms which appear to be making no attempt to issue clear, fair and not misleading promotions, and other firms which have attempted to do so but fail through a lack of understanding of mortgage regulation.
The watchdog will continue to work with the industry to improve standards and says it will identify and deal with the worst firms, including using formal enforcement powers where appropriate.
Key areas of focus in the future include direct mail, the internet, mortgage brokers, spread betting and venture capital trusts (VCTs).
Vernon Everitt, FSA retail themes director, says: “Responsibility for ensuring that customers are given clear and straightforward descriptions of financial products and services lies squarely with the senior management of the firms selling them.
"So while our shift away from detailed rules to a more principles-based approach will allow firms the freedom they need to market effectively, senior management also needs to put in place the right checks and balances to ensure that customers are being treated fairly.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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