The burial of inconvenient or unappetizing detail in the small print of financial services advertisements has been slammed by Britain's Financial Services Authority, which announced Tuesday a crackdown on such attempts to mislead by concealment.
According to the Authority, financial services firms spent £1.4bn on advertising and promotions during 2001, reaching 38 million consumers by television, 38 million by post and 27 million via newspapers.
But too many ads, says the FSA, create unrealistic expectations about the return on investments. It is concerned that important information goes unread by consumers because it is concealed in the small print – often six point font or less. The body intends to redress the situation by insisting that ads place equal emphasis on product advantages and disadvantages.
Although the regulator believes the majority of financial services advertisers abide by the spirit of the law, it wants the public to become more aware of the standards set for its protection. One step toward this end is the launch this summer of a consumer hotline, encouraging the public to report misleading ads.
Meantime, the watchdog is consulting with the industry and its agencies on proposals designed to add muscle to the current rules – especially the way in which advertisers use historic performance data in ads. Such information, the FSA believes, should be presented in context with the future performance of a product; while warnings about linkage with past performance will be required to appear in the main body of the ad rather than the small print
Bond fund advertisements, for example, should prominently feature information both on annual income and long-term income, including losses to the capital invested as well as gains.
Says FSA consumer director Christine Farnish: “Our proposals on past performance are designed to ensure that such figures are not viewed in isolation but considered alongside other important factors, such as flexibility, charges and investment strategy.”
Data sourced from: BBC Online Business News (UK); additional content by WARC staff