The Financial Services Authority (FSA) is to clamp down on the claims that companies can make in advertising about the past performance of their products.
In a consultation document published last week the regulator says it wants to see more balanced advertising. It also says the use of past performance is important in the marketing of financial products, but of questionable value to consumers.Companies will be banned from displaying data in monetary terms, and can only use their own performance data if it is less prominent than mandatory data set down by the FSA.
The use of past performance has become increasingly controversial following the stockmarket slump of the past three years, during which products such as endowments and ISAs have failed to meet the performance suggested in marketing literature. Companies have also been widely criticised for using “cherry-picked” performance data in advertising.
Lucian Camp, chairman of specialist ad agency CCHM, says the FSA is shutting the door on a practice “which no one wants to use anymore.”
But New Star Asset Management marketing director Rob Page says: “We are glad the FSA has not banned past performance outright, because it is vital to understand a product’s quality. We will continue to use it judiciously.”
Earlier this year the FSA said it would step up its monitoring of promotional activity and police marketing material.