Following a review of the press advertisements of 57 insurance firms, the UK Financial Services Authority has warned companies in the home, travel and car insurance markets to stop using saving claims in their advertising that could mislead consumers.
The Financial Services Authority (FSA) has threatened regulatory action after it found that 57% of motor insurance advertisements with savings claims were either unclear or misleading as they failed to provide any evidence as to how claimed savings would be achieved.
In addition, the financial watchdog reported that, while travel insurance saving claims were generally of a higher standard, 25% of home insurance advertisements were also misleading, again failing to show how the savings would be achieved.
The FSA went on to say that numerous insurance advertisements were also misleading as they gave the impression that most consumers are eligible for such savings, when, in fact, only a few are.
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.
He continued: 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.
Although the FSA has ordered the firms in question to improve the quality of their advertising before it repeats the review in three months’ time, the authority has come under fire from Which? for not doing enough.
Emma Bandey, personal finance campaigner at Which?, commented: Why is the FSA consistently reluctant to name and shame firms? Ms Bandey went on to say that the FSA needs to follow the example of the Advertising Standards Authority, which publishes the complaints that it receives, rather than reprimanding firms behind closed doors.