FSA criticised over finance ads

MPs want the FSA's processes to be more open

A committee of MPs has criticised the Financial Services Authority's (FSA) regulation of financial advertising.

The Treasury committee said the FSA should copy the policy of the Advertising Standards Authority (ASA) and make its findings public.

Committee chairman John McFall MP has written to FSA chairman Sir Callum McCarthy complaining about its methods.

But the FSA responded by saying it pursued hundreds of complaints every year about misleading adverts.

A spokeswoman explained: "As a regulator we have a formal procedure we have to go through - we can't just issue a formal censure of a firm."

ASA procedures

The FSA needs to take a far more robust approach by highlighting poor practice John McFall MP, Treasury committee chairman

The ASA publishes its rulings on its web site and the more interesting ones are regularly reported by newspapers and broadcasters.

In his letter to the FSA, Mr McFall said the financial regulator should adopt this approach.

"The FSA has, at the moment, a seemingly far less transparent system in regard to financial advertisements, with no publication of complaints, and little public record of which companies have broken the rules," he said.

"This means consumers seem to get a worse deal, with the FSA offering no public scrutiny and little incentive for advertisers to keep to the rules.

"The FSA needs to take a far more robust approach by highlighting poor practice," he added.

FSA action

But the FSA denied it was asleep on the job.

A spokeswoman pointed out that it had pursued 820 cases since April 2004.

And a small number of the FSA's enforcement proceedings have been made public - 12 in the last two years.

The FSA fined the Foresters Friendly Society for misleading adverts

In August it fined the Foresters Friendly Society £55,000 for publishing misleading TV adverts and marketing literature.

This year the FSA has been looking at direct mail adverts for products such as pensions and investment trusts and is scrutinising adverts for sub-prime mortgages and spread betting.

In the past year it has warned about the generally misleading nature of adverts for venture capital trusts, told people to be careful about adverts on the internet, and warned about promotions for pension unlocking, general insurance and critical illness insurance.

The FSA's Financial Promotions department has a consumer hotline - 08457 300168 - for complaints.

Adverts for credit cards and unsecured loans are dealt with by the Office of Fair Trading.