• Doing business with the FSA
  • Being regulated
    • Financial promotions
      • Conduct of Business Sourcebooks
        • General insurance

A new Insurance Conduct of Business Sourcebook came into force on 6 January 2008 with a six-month transitional period to 5 July.

The key requirement for financial promotions is unchanged. Firms must take steps to ensure their financial promotions are clear, fair and not misleading at all times.

To be clear, fair and not misleading, promotions should:

• create an impression that is consistent with the experience of the customers who respond; and
• prominently set out the basis for claimed benefits.

Many general insurance products are promoted on the basis of price. We expect these and other claimed benefits to be promoted clearly and fairly.

A promotion that highlights benefits is more likely to create an impression matching the experience of consumers who respond if it highlights key terms, conditions, eligibility criteria and exclusions.

Some examples

A firm issues a series of promotions that lead with the following headlines:

"Save £150"

"You could save £150"

In each case we expect the majority of customers who respond to the promotions to achieve the claimed savings.

If that is unlikely to take place then the firm should prominently state, in the promotion, the proportion of customers who are likely to achieve the saving. This would give readers the opportunity to assess how likely they are to get the saving.

The firm also needs to prominently set out the basis for the claimed saving.

We assess prominence in the context of the promotion as a whole. Factors such as the position of text, background, colour and type size can mean information is not included prominently. Firms should avoid using small print to qualify prominent claims.

Progress to date

In January 2007 we reported our concern that too many general insurance financial promotions were promising significant savings - sometimes for hundreds of pounds - when this did not match the experience of the consumers who responded.

In April 2007 we were pleased to see overall improvement in the standard of national press and television savings claims, with deficient advertising in the press down from 45% to 6%.

Clear communications are a very visible way for firms to demonstrate that they treat their customers fairly. Firms' senior management need to ensure that:

• insurance products and services are designed to meet the needs of identified consumer groups and are targeted appropriately;
• there is appropriate management information in place to test whether the firm is treating its customers fairly; and
• the firm's marketing and compliance teams are collaborating effectively to achieve the above outcomes.

We continue to monitor general insurance promotions closely across all media (press, direct mail, TV, internet, in-store and outdoor advertising).

Related links

Financial Promotions bulletin - Issue 3 [PDF]

Financial Promotions bulletin - Issue 5 [PDF]

'Savings claims' in home, motor and travel insurance promotions

'Savings claims' in home and motor insurance promotions