With mortgage and insurance ads soon coming within its regulatory remit, the FSA has recently come out with a slew of measures and announcements. We report and try to differentiate the ASA and FSA domains.
Topic: Financial services
Who: The Financial Services Authority
When: July 2004
With hundreds of thousands of financial advertisements appearing every year and the remit of the Financial Services Authority ("FSA") extending to mortgage advertising in October 2004 and general insurance advertising in January 2005, the FSA has announced a number of significant measures to up its regulatory act.
On 6 July the FSA Advertising Complaints Hotline opened for business. It will operate from 8am to 8pm Monday to Friday on 08457 300168.
The hotline will be for the public and firms to report misleading advertisements for financial products. Details of callers' identities will remain strictly confidential.
In a separate but related development, the FSA is setting up a new department to clamp down on misleading financial advertising. One of the department's roles will be to increase monitoring of all advertising for financial services including internet, TV, direct mail and newspaper ads.
New specialist team
The FSA is also setting up a new specialist team which will undertake visits to firms to check whether their systems and controls around financial promotions are adequate.
Higher fines for those who ignore guidance
In a related development, a clear message was conveyed in a speech on FSA Enforcement Policy delivered by Callum McCarthy, Chairman of the FSA in a speech in London in early July 2004. Mr McCarthy indicated that financial firms who ignored clear regulatory guidance and were subsequently found guilty of breaches were likely to receive higher fines than those firms which co-operated with FSA investigations.
Why this matters:
On marketinglaw we have been saying for some time that the FSA needs a step change when it comes to financial advertising regulation. There is also a continuing need for a sharpened distinction between the roles of the FSA in this area and that of the Advertising Standards Authority.
When the FSA announces that last year it handled 580 advertising related cases following complaints in respect of advertising from 359 different firms, this is not very impressive given it says in the same communication that hundreds of thousands of financial services ads are published every year. It also underlines the fact that the FSA ad control system is still very much a cottage industry compared with the many thousands of complaints handled each year by the ASA.
The ASA also conducts monitoring operations and deals with consumer and investor complaints in respect of financial advertising. Just how is the relative new kid on the block going to compete with this, and surely it is not a good idea for the roles of the two bodies to overlap.
One assumes that in good time before the FSA starts to regulate mortgage advertising in October 2004, the FSA and the ASA will have sat down and marked out some demarcation lines between their responsibilities and activities. We look forward to the joint press release.