Session 2005-06, 9 November 2006
Treasury Committee Chairman expresses concern over FSA regulation of financial advertising
Treasury Committee chairman John McFall MP has written to the Financial Services Authority to express concern about the FSA’s regulation of financial advertising.
He has pointed out to Sir Callum McCarthy that the Financial Services Consumer panel is on record as having said that it is “a quirk of the set up” that financial advertising is not covered by the Advertising Standards Authority (ASA). Research by the Consumer panel had found a worrying level of non-compliance.
Mr McFall added: “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.”
In a submission, the ASA told the Treasury Committee that their “primary sanction is adverse publicity for those advertisers that break [the rules].”
The chairman made the point that the ASA publishes the results of its investigations, “explaining clearly why it has found for or against a certain advertisement. Its website provides a clear record of these judgements. The ASA regime also provides the capability to have advertisements checked for their adherence to the code.”
Mr McFall added: “The FSA has, at the moment, 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.”
Mr McFall asked: “How is the public to trust that enforcement is being undertaken in this area, and how are companies to learn what is and is not acceptable? I would encourage the FSA to examine whether any aspects of the ASA model would prove useful in protecting consumers’ interests.”