HM Treasury proposals that ads for some financial products should include warnings about potential risks could “over-complicate” products and put genuine customers off buying, according to marketers.
As part of the Government’s White Paper in response to the financial crisis, the Treasury has proposed a warning system for financial products to help customers understand the risks involved. The warnings would be similar to those on tobacco products or the traffic light system on food.
Steve Weller (pictured), marketing director of price comparison site uSwitch, says although any information which enhances understanding is a “good thing”, Government involvement tends to “over-complicate things”.
Pete Markey, marketing director of insurer More Than, says more information could lead to increased “jargon”, which could alienate potential customers when the priority should be about “explaining products in a clear way”.
Greg Handrick, associate partner at marketing consultancy Prophet, says unlike the warnings on cigarette packets, the risks associated with financial products are harder to convey.
“Smoking kills is crystal clear, but I fear that these financial messages will be far more difficult to craft.”
The Financial Services Authority currently regulates and enforces the promotion of financial services and products to ensure they are “clear, fair and not misleading”. The watchdog has the power to fine the firms it regulates for failings.
The City watchdog has also launched the Moneymadeclear website to increase financial awareness so that consumers understand the risks involved with certain financial products. The site offers “impartial information and tools” and promises “No selling. No jargon. Just the facts.”