In a clutch of recently published, but frustratingly anonymised “Real life cases”, the financial services regulator reported on how the way a mobile phone was depicted in a travel insurance leaflet rendered the communication misleading. Lee Rubin reports.
Topic: Insurance
Who: Financial Services Authority
When: March 2008, reported September 2009
Where: UK
Law stated as at: October 2009
What happened:
A case investigated by the Financial Services Authority (FSA) concerning an image used on a promotional leaflet highlights the issues surrounding the use of images which may mislead consumers about the extent of insurance cover being offered.
The promotion is question was brought to the attention of the FSA specialist promotions supervisory team when a consumer contacted the FSA through the financial promotions complaint hotline.
The promotion used an image depicting a holiday scene to promote the firm's travel insurance services. The slogan, used in conjunctions with the image, also appeared to suggest that this travel insurance product was one which would allow the policyholder to enjoy their trip free of worry and confident that the product would provide sufficient cover against any eventuality.
The FSA's concerns were focused on the use of the image, which depicted valuables and personable belongings, including a mobile phone, lying unattended. This may have given the impression to consumers that they could be confident that they would have been covered in the event of such a loss by this product. However, under the terms and conditions of this travel insurance policy, mobile phones and certain other items would not have been covered if they had been left unattended. Was this potentially misleading to consumers?
FSA Handbook
The rules governing financial promotions for insurance products are contained in the FSA Handbook in the Insurance: Conduct of Business Sourcebook (ICOBS). Here the FSA's overriding principle is that when a firm communicates information, including a financial promotion, to a customer or other policyholder, it must take reasonable steps to communicate it in a way that is 'clear, fair and not misleading' (ICOBS 2.2.2). In this instance, the FSA felt that the image used could potentially have given consumers unfair expectations regarding the extent to which they were covered by the product. Consequently, the FSA considered that the firm's promotion was in breach of this rule.
Action taken
After consultation with the firm's FSA supervisor, the FSA agreed that it would be proportionate to contact the firm regarding its concerns over the promotion. The FSA's objective was either to have the promotion withdrawn or to question the firm on how it planned to manage the expectations of consumers who may have needed to make claims under the circumstances depicted in the promotion.
Following the FSA's approach, the firm withdrew the promotion from circulation as part of a planned renewal of all promotional materials, and also confirmed that any future promotions would address the FSA's concerns to ensure compliance with the relevant provisions of ICOBS.
Why this matters:
Although it is frustrating that the advertiser concerned and the particular ad in question cannot be identified, this case serves as a reminder to firms that the use of images in financial promotions can be a powerful tool for promoting a firm's brand, its products and its services, and that they must be aware that images can also convey a particular message to potential consumers. As such, firms must take care to ensure that any images used do not mislead potential consumers about the nature of the products or any of its limitations. Images used in such a way can be as misleading as any headline claim, slogan or body of text and care should be taken to ensure the overall impression form the promotion is 'clear, fair, and not misleading' while remaining relevant to the product or services offered.
