FSA in crackdown on misleading advertising

FSA in crackdown on misleading advertising


The FSA is stepping up its pursuit of firms using misleading advertising and has seen a 32 percent rise in the number of promotions being withdrawn or amended.

A freedom of information act request by law firm Reynolds Porter Chamberlain (RPC) showed 262 promotions were withdrawn or amended in 2010, compared to 199 in 2009 – a 32 percent rise.

A partner at RPC, Jonathan Davies, believes the increase is due to the FSA signalling what may come, as they will be given further powers to intervene come late 2012, when they are to become the Financial Conduct Authority (FCA).

The additional powers attributed to the FCA will allow them to publicly name those businesses it believes to have misleading promotional material and they will also be given the power to order the amendment or withdrawal of any material that promotes a financial product.

These new powers are significant as the FSA currently only has a remit to warn a business that it could possibly reprimand them for any misleading promotional material, which usually causes the business in question to withdraw or removing the offending advertisements.

Jonathan Davies said: “There is a very competitive market for many financial products. This puts pressure on firms to make their offering stand out and it is very easy to fall foul of the rules.

"With the FSA clamping down and with new powers for its successor on the way, it is more important than ever for businesses to make sure their adverts are watertight."

He added: “Businesses will be particularly concerned about the naming and shaming powers the FCA will have because the reputational damage that could follow a disagreement with the FCA will be very high indeed."

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