FSA review into sponsored links
Sponsored links are text-based advertisements that often appear as a result of a keyword search either on a search engine or associated site.
Increasingly we see firms using sponsored links to promote their products and services. Depending on their content, a sponsored link may also be a financial promotion – that is, when they induce consumers to take out a regulated product or use a firm's services. Authorised firms must ensure all their communications, including sponsored links, are fair, clear and not misleading.1
Our findings
Our review of over 200 sponsored links identified a number of areas where firms fall short of the required standards, for example:
- low interest rates which were either unavailable at all or which were subject to extremely onerous conditions which were not disclosed;
- links returned from an impaired credit search lacked any APR information;
- instances where mortgage advice or independent advice was advertised as being free when either this was not the case or it was unclear whether it was.
There were also some examples of general insurance price savings claims not having a substantiation of the percentage of individuals receiving that claim. Of the 47 sponsored links reviewed during October and November 2007, 23% were deficient in this regard.
As demonstrated in the example below, the two fictional examples would, in our view, create an expectation in customers' minds that they could receive the amount of savings quoted without substantiating the percentage of people actually receiving them.
There are also instances where the sponsored link returned by a search engine may be compliant on its own but could be misleading by omission when taken in the context of the particular search term used. Firms should pay particular attention to the search terms they purchase or instruct media agencies to purchase from search engine providers. They need to assess whether purchasing a term has a potential to create misleading expectations. Firms should also consider negatively excluding terms in the search terms purchased in order to ensure that their sponsored links do not mislead consumers.
Our initial research into those sponsored links returned from searches on a range of financial products and services identified links to websites that did not accurately reflect the expectations created by the search term used. For instance:
- 'independent financial advisors' included those for firms that were not independent - carrying the risk that consumers may be misled into dealing with firms that are not independent;
- 'guaranteed returns' included those for firms whose investment products were linked to the performance of stocks and shares where returns could not in fact be guaranteed;
- those relating to 'free advice' included links to firms whose advice was not free.
Next steps
We have contacted a number of firms and told them they should avoid creating misleading expectations in the use of search terms for their sponsored links. Some of the firms which we came across as a result of our searches are regulated by the OFT and Local Authority Trading Standards Services under the Consumer Credit (Advertisements) Regulations 2004 rather than by the FSA. The OFT's approach on the issue is similar to our own. We are therefore collaborating with the OFT to produce a guide for firms which pay to advertise via sponsored links.
We will continue to pick this up as part of our supervision of financial promotions and we will take appropriate action if we pick up failings in this area.
1 Firms need to be aware that an organic link on a search engine may also be a financial promotion if the firm controls the content and that the findings of this review may also be applicable.
