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Last Updated: Tuesday, 16 January 2007, 14:29 GMT
Insurers warned on misleading ads
Car crash
More than half of adverts for car insurance are misleading
Insurance companies have been told by the Financial Services Authority (FSA) to stop publishing misleading adverts saying that customers will save money.

The FSA has found widespread evidence that such claims in press adverts are often wrong or unsubstantiated.

The adverts often give the impression that customers will save money when in fact few will do so.

The insurance firms have been given three months to change the wording of their adverts or face action.

"Most people rely on some form of insurance to protect them and advertising is a major influence on what they choose to buy," said Vernon Everitt of the FSA.

"So it must be clear, fair and not misleading, leaving people with a balanced picture of what's on offer.

"This work demonstrates that firms in the home, travel and car insurance markets must shape up and ensure that the claims they make don't mislead," he added.

Review

In the course of one month during 2006 the FSA reviewed the newspaper adverts of 57 insurance companies.

It found that:

  • 57% of motor insurance adverts did not provide any evidence about how savings might be made
  • 25% of home insurance adverts had similar problems
  • however, travel insurance adverts were usually much better.

If firms do not improve the quality of their adverts quickly they face public censure by the FSA or may be fined.

Since 2004, when the FSA took over the regulation of general insurance, it has taken similar action against 12 companies about their adverts and fined them a total of 1.5m.

"We take the FSA's concerns seriously," said Nick Starling of the Association of British Insurers.

"Offers must be accurate and deliver what the customer is led to expect. The ABI and our members will work closely with the FSA to achieve this."




SEE ALSO
New FSA probe into debt insurance
11 Jan 07 |  Business
Warning over poor mortgage advice
08 Jan 07 |  Business
Interest-only mortgages warning
13 Dec 06 |  Business
Mortgage brokers 'disguised fees'
29 Nov 06 |  Business
Broker fined for PPI mis-selling
26 Oct 06 |  Business
FSA warns over bogus car insurer
20 Sep 06 |  Business

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