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FSA/PN/004/2007
16 January 2007

The Financial Services Authority (FSA) has today warned insurance firms to stop using savings claims which could mislead consumers in their advertising or face regulatory action.

The warning from the financial watchdog follows a review of press advertisements from 57 firms selling motor, home and travel insurance and who accounted for more than three quarters of the press advertising spend in these areas during 2006.

The FSA found that more than half of motor insurance advertisements with savings claims were either unclear or misleading. It also had the same concerns with a quarter of the home insurance advertisements. Travel insurance saving claims were generally of a higher standard than the others.

Insurance advertisements can be misleading if they give the impression that most consumers are eligible for such savings when in fact only a few are. They can also be unclear if the basis of the savings claim is not clearly set out.

Vernon Everitt, FSA Retail Themes Director, said:

"Most people rely on some form of insurance to protect them and advertising is a major influence on what they choose to buy. So it must be clear, fair and not misleading, leaving people with a balanced picture of what's on offer. This work demonstrates that firms in the home, travel and car insurance markets must shape up and ensure that the claims they make don't mislead. We will be back in three months to assess progress and will then decide whether further regulatory action is needed."

The FSA has contacted the senior management of firms where it had concerns requiring them to improve the quality of their advertising and will repeat its review in three months' time.

Consumers can get help with selecting the right product by using the range of free, impartial information which includes an insurance guide – Are you covered? - available on the FSA's new consumer website.

Notes for editors

1. The review into 'savings claims' in home, motor and travel insurance promotions showed that
   • 57% of motor savings claim advertisments failed to provide any evidence as to how claimed savings would be achieved and;
   • 25% of home savings claim advertisments failed to provide any evidence as to how claimed savings would be achieved.
2. Full details of the review and latest information on the FSA's financial promotions regime including the 2006 progress report - Financial Promotions: Progress update and future direction [PDF] can be found on the Financial promotions section of the website.
3. The FSA operates a proactive, risk-based approach in financial promotions focusing on areas where consumers could be most at risk. Anyone who sees an advert or other promotions that they think is misleading can report it by calling the FSA's Financial Promotions hotline on 08457 300 168.
4. Consumers can find free, impartial information to help with choosing insurance products including health, payment protection and income protection insurance as well as mortgages and pensions on the FSA's new consumer website.
5. 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 for consumers; and fighting financial crime.
6. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.