FSA launches Hotline to help identify misleading adverts

The Hotline is part of the FSA's commitment to put significantly more resources into the regulation of financial advertising, including setting up a new department which will lead the efforts to stamp out misleading advertising.

The Hotline number, 08457 300 168, opens for business today. It will operate from 8am to 8pm Monday to Friday. Details of the caller will remain strictly confidential.

In the past year the FSA has dealt with 580 advertising-related cases with 359 different firms. In some cases it asks firms to amend or withdraw their advertisements or even offer customers their money back and, in the more serious cases, the FSA may also take enforcement action which can lead to a fine and/or the public naming of the firm.

Anna Bradley, FSA Director of Retail Themes, said:

"Hundreds of thousands of financial adverts appear every year on TV, radio and in the press. To help us put an end to misleading ads we need the eyes and ears of the public. The Hotline will make it much easier for consumers and firms to report on adverts they believe flout the rules and will enable us to act quickly and if necessary remove the offending material before someone loses out.

"We hope that firms will make use of the new hotline, as well as consumers. Consumers can pay a heavy price when they buy a financial product as a result of a misleading advert. But the industry also pays a heavy price when their reputation is damaged because one firm makes an inflated claim to gain advantage over their competitors."

The new department will increase monitoring of the internet, TV and direct mail as well as national and regional newspaper adverts. The rules require adverts to be clear about the benefits and the risks of the investment, by making it clear what the product is and by not hiding charges or making unrealistic headline claims.

The FSA is also setting up a specialist team which will undertake visits to firms to check whether their systems and controls around financial promotions are adequate. These visits will give the FSA the opportunity to discuss with firms how they can do more to achieve higher standards.

Consumer research shows that advertising can have a significant influence on a decision to buy a financial product. Firms rely heavily on advertising to attract new customers. Last year over 683 million was spent on financial advertising in newspapers and TV alone.

The FSA monitors advertising and marketing of all investment products such as pensions, ISAs, bonds, unit trusts and OEICs, and coverage will be extended to mortgages from October. In the past the FSA has seen particular problems with advertisements for precipice bonds, share tipping and pensions unlocking.

Notes for editors

1. If you think you have spotted a misleading advertisement you could contact the FSA Hotline on 08457 300 168 or via the FSA website for the industry or here for consumers. Alternatively you can write to the Financial Promotions Department, Retail Themes Division, FSA, 25 The North Colonnade, Canary Wharf, E14 5HS.

2. Out of the 580 advertising related cases the FSA dealt with last year: 217 (37%) were sent to us by members of the public, 238 (41%) were identified by the FSA and 125 (22%) were sent to us by regulated firms. Of these the FSA pursued 120 cases of poor advertising with 96 firms.

3. Examples of recent action the FSA has taken against firms for misleading advertising are: Chase de Vere, fined 165,000 for misleading direct offer promotion for high income and precipice bonds, and Berkeley Jacobs 175,000 for 'pensions unlocking'.

4. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection of consumers; and fighting financial crime.

5. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.