FSA review of website financial promotions
We have recently completed a 12-month review of financial promotions on the internet. The internet is the fastest growing medium for promoting financial products. Given its immediacy and ability to link online advertising to online direct sales it potentially presents a high risk to consumers.
It is therefore important for firms to ensure that their web-based promotions provide clear information which enables consumers to make informed decisions about financial products and services.
A firm's website promoting its financial products and services is a financial promotion and therefore must be fair, clear and not misleading. Firms' senior management are responsible for ensuring they have the right systems and controls in place so that financial promotions standards are met and customers are treated fairly.
In February 2006, we communicated the findings of our thematic review in this area, focusing specifically on a sample of firms' websites. Given the concerns identified in 2006 and the rapid growth of the medium, we have increased our monitoring of internet promotions.
Our most recent phase of thematic work reviewed a wide sample of websites across the range of products that fall within our financial promotions regime, focusing on the areas of higher risk. The purpose of the review was to ensure that firms are aware of their responsibility to raise standards in website promotions, and to assist them in doing so with a number of examples of good and poor practice.
Approach and results
Over the 12-month period, we carried out 130 website reviews.1 When examining the websites we replicated the type of journey a customer may be making through the website. For example, the journey might be initiated by clicking on a banner advert, typing in a website address from a newspaper advert or carrying out a search. The selection of sites was based on those that either had the highest internet spend, advertising spend generally or those featuring prominently from search engine results. Our selection focused on websites offering higher risk products.
75% of the websites reviewed were of an acceptable standard; however, 25% fell short of our financial promotions standards. This is partly because firms are not placing enough emphasis on the customer journey and general website design when placing key information. In some instances general website maintenance was also lacking, resulting in out-of-date or incorrect information being provided to consumers.
Examples of good and bad practice
1. Information presented in an accurate, clear and balanced way
Examples of good practices
- A clear description and key information about the product or service is provided (e.g. the nature and commitment required and the risks involved).
Examples of bad practices
- Advantages and disadvantages are not given the same amount of weight and prominence on the same web page.
- Headline claims are not clearly substantiated and the substantiation is not placed close to the claim itself.
- Information is not accurate and is not in accordance with current market conditions (e.g. incorrect base rates) and with what the firm is offering (e.g. special offers have not been removed once they have expired).
2. The customer's journey enables key information to be accessed easily
Examples of good practices
- The key information (see 1 above) is presented to consumers in a logical manner.
- Both the benefits and drawbacks of a product (or its features) are presented in close proximity to each other.
Examples of bad practices
- The risk information can be easily overlooked which could also result in the consumer being taken straight to an application form (e.g. by clicking on to a banner advertisement or accepting a cookie).
- Key information, such as on fees or exclusions are buried within the website or placed in a separate section such as FAQs.
3. Where required, clearly and prominently placed relevant risk information
Examples of good practices
- Risk information appears prominently on the first page of the website the customer arrives at and near to the product description.
- Devices such as fixed risk warnings remain on the screen even when the customer scrolls up and down.
- The customer is encouraged to think about whether the product is right for them.
- The risks are repeated further into the application process.
Examples of bad practices
- Risk warnings are not clearly presented (e.g. poor use of font, position, colour, no use of text boxes and other presentational tools).
- Firms have not taken into account the different sized browsers of consumers when positioning this information (i.e. it is necessary to scroll down to access the information).
- Risk information is not relevant to the particular product.
Next steps
We have contacted the individual firms where we had concerns asking them to make changes to their website. Given the importance and growth of the internet we will continue to monitor internet promotions closely. We expect firms to take immediate steps to improve their websites and will be carrying out a further review in March 2008. If we still identify shortcomings at that stage, we will not hesitate to take direct action with the firms involved.
Sponsored links and search engine results (if the firm controls the content of the search return) may also be financial promotions. Sponsored links by authorised firms which are not financial promotions are still required to be fair, clear and not misleading). View our recent review on sponsored links.
1 The review consisted of 130 visits to the websites of 77 firms over the 12 month period.