The radio industry believes “wealth warnings” on financial services ads, which cost it tens of millions of pounds in lost revenue, could start to come to an end in weeks.
Classic FM had a meeting with consumer affairs minister Kim Howells last week where it is understood that he gave his blessing for the removal of the warnings.
Wealth warnings are ten-second cautions at the end of ads which deal with mortgages, investments, and credit loans.
A spokesman for the minister says: “We will be announcing something on that soon. It will be weeks rather than months.”
Classic FM sales director Giles Howard says: “We lose in two ways. First, we could sell that ten seconds of time to other businesses. Second, and most importantly, there are some financial services companies which don’t use radio because that last ten seconds is a negative statement about their product.”
The Radio Advertising Bureau (RAB), the marketing body for radio, estimates wealth warnings cost the industry 17m pounds a year in lost revenue. It also says most industries spend about five per cent of their advertising budgets on radio. The financial services sector spends only 2.6 per cent.
The RAB has lobbied the Government for a change in the law for the past six years (MW March 5 1998). It believes these warnings are better given at the point of sale, whether on the phone or in a shop. The Government is understood to be sympathetic towards this view.
One route the Government could take would be to attach an amendment to the Financial Services Marketing Bill, which was drafted last year and will begin its passage through Parliament at Easter. The current warnings fall under the Consumer Credit & Investment Acts.