Which? has urged the Financial Services Authority (FSA) to name and shame insurance companies that run misleading advertising instead of merely warning them to stop.
The consumer group spoke out after the FSA issued an ultimatum to insurance companies to stop using misleading savings claims in ads or face regulatory action.
Which? personal finance campaigner Emma Bandey says the authority must go further. She says: “Why is the FSA consistently reluctant to name and shame firms? These ‘savings claims’ ads are a major influence for people looking to buy insurance.” Which? has called for the FSA to behave more like the Advertising Standards Authority (ASA), which publishes complaints and the results of its investigations.
Bandey adds: “It [the ASA] doesn’t just tell firms behind closed doors that they have three months to improve. The FSA needs to follow suit and name these ads, firstly to motivate companies to improve and secondly to keep consumers informed and protected.” But an FSA spokesman says that, unlike the ASA, it does not have to rely on a consumer complaint to investigate. He adds that if failing insurance firms do not improve in three months, action will be taken and details published.
The financial watchdog undertook a review of press ads from 57 firms selling motor, home and travel insurance, which accounted for more than three-quarters of the press advertising spend in these areas during 2006.
More than half of motor insurance and a quarter of home insurance advertisements with savings claims were found unclear or misleading.
Commenting on the review, FSA retail themes director Vernon Everitt says it demonstrates that insurance firms ‘must shape up’.