AXA Sun Life fined 500,000 for misleading advertisements

AXA Sun Life's advertisements for the Bonus Cash Builder Plus Plan (BCP) and the Guaranteed Over 50 Plan (GO50) did not provide customers with sufficient information about how the product worked or the risks involved. The design, content and format of the promotions focused attention on the benefits of the products including the offer of free promotional gifts, but gave less prominence to key information about the risks.

Furthermore, advertisements for the BCP between January 2002 and April 2003 included comparative data that was itself inaccurate. The serious nature of AXA Sun Lifes breaches was compounded by the firm's failure to promptly inform the FSA of the data error. The firm discovered the error in April 2003. Although the error was remedied immediately, the FSA was not informed of the error until the firm wrote to the FSA on 19 November 2003.

Andrew Procter, Director of Enforcement at the FSA, said:

"The FSA takes the issue of misleading financial promotions very seriously. We expect firms to comply with the spirit, not just the letter, of the rules, so that consumers gain a clear and fair understanding through the promotion. If a firm's financial promotions fail to meet our requirement to be fair, clear and not misleading, and the firm fails to treat its customers fairly, we will not hesitate to act.

"We set up a financial promotions hotline in July this year and we urge any customers who see advertisements they believe breach these fundamental rules to report them to us. The Hotline has made it much easier for consumers and firms to report adverts they believe flout the rules and will enable us to act quickly and if necessary remove the offending material before someone loses out."

Following a request from the FSAs Financial Promotions Monitoring Team, in January 2004, that AXA Sun Life withdraw all general advertising and direct offer packs for the products, AXA Sun Life withdrew the whole promotional campaign for both products. The firm has also been proactive in sending remedial letters, agreed with the FSA, to all BCP customers affected by the inaccurate comparative data. These letters also add clarity to the product's features.

AXA Sun Life has also voluntarily appointed an independent third party to report on its systems and controls relating to financial promotions.

The failings identified in this case are serious and merit a significant penalty. However, the FSA recognises that the impact of the failings, both actual and potential, has been mitigated to some extent by the firm's co-operation. As a result, the firm has received considerable credit for these actions and without this degree of co-operation the penalty proposed would have been significantly higher.

Notes for editors

1. The full text of the Final Notice issued by the Regulatory Decisions Committee, which includes the background to the case, the relevant statutory provisions, regulatory requirements contravened and the factors taken into account by the RDC when setting the level of the fine may be found on the FSA website.

2. The FSA's Financial Promotions Hotline number is 08457 300 168.

3. The BCP is a with-profits endowment assurance policy which provides a guaranteed cash sum on maturity and life cover throughout the investment period, provided that premiums continue to be paid. Early redemption may mean that the customer would receive significantly less than the value of the premiums paid in to the BCP.

4. The GO50 is a life policy which provides a fixed guaranteed cash sum on the death of the policy holder. As a whole of life insurance contract, if the policy is cancelled the customer may get back significantly less than the value of the premiums paid into the policy and if it is cashed in during the early years the customer will not get back any premiums.

5. Financial penalties are not treated as income by the FSA. They are applied for the benefit of authorised persons (or the issuers of securities admitted to the official list) as appropriate, and so given back to the industry in subsequent years.

6. 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.

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