The Financial Conduct Authority (FCA) has seen examples where a number of firms are not following advertising rules.
Misleading Financial Promotion for Over 50s Life Cover
The FCA financial promotions team have seen promotions for Life Policies for the over-50s where they believe consumers could be misled into thinking they are buying a policy that will cover their funeral costs. Proceeds of these policies can be used for payment of, or towards, the cost of a funeral. However, it is important that, if a firm’s promotion refers to funerals and associated costs, consumers are not misled into believing they are buying a funeral plan that will cover their funeral costs in full.
Over-50s Life policies are widely promoted through various media channels, including television advertisements. They guarantee to provide Life Cover for the over-50s without the need for customers to have a medical examination. If a firm’s promotion includes product features or benefits, these must be presented in a fair, clear, and non-misleading way taking into account the target audience.
In November 2012, the Association of British Insurers published ‘Initial Guidance on Over 50s plans’ which providers of these plans may wish to refer to when designing their promotions.
The regulator expects all promotions to be fair, clear and not misleading in line with Conduct of Business Sourcebook (COBS 4) and Principles for Businesses (PRIN 7).
Furniture companies failing to comply with CONC 3 rules
The FCA have seen examples where furniture companies are not complying with The Consumer Credit sourcebook (CONC 3), which sets out the FCA rules around firms’ financial promotions, particularly for websites.
Some websites offer ‘0% Interest Free Credit’ but fail to state the minimum spend required (and in some cases, the offer appears alongside products which are cheaper than the minimum spend).
Some sites offer payment options including cost of credit, triggering the requirement for a representative example, but this is not included. Some fail to contain a prominent credit broker statement.
Motor Finance Firms
The FCA Financial Promotions team has intelligence that some motor finance firms are not complying with our rules in CONC 3. This is particularly in relation to posts on social media platforms such as Facebook, Twitter and Instagram. The main issues they’ve seen include:
- not displaying a representative example when triggered
- not making the representative APR prominent
- not mentioning the legal name of the firm
- not displaying or a lack of prominence of the credit broker statement
- displaying monthly costs for a vehicle without indicating whether this is based on a credit or hire agreement
Firms’ use of their authorisation/ regulatory status in a promotional way
The FCA has intelligence that some firms are using their FCA-authorised status in a promotional way. This which could lead to consumer harm and is against the rules. Firms must not use their authorisation status in that way and, if they are, should cease doing so.
They’ve recently conducted a review looking at how firms present their FCA authorisation status on their websites. The FCA remind all firms of their obligations
- when communicating with clients, including details about the extent of their FCA authorisation/regulation, and;
- in relation to the use of the FCA logo. For example:
- Unclear, unfair and misleading statements by a firm may involve a breach of FCA’s Principles for Businesses, Principle 7.
- General Provisions (GEN 1) (Referring to approval by the FCA), the purpose of which is to prevent clients being misled about the extent to which the FCA has approved a firm’s affairs, and
- GEN 4 (Statements about authorisation and regulation by the appropriate regulator), in particular, GEN 4 Annex 1R sets out the required disclosure statements for FCA authorised persons, with relevant notes. Note 5 (GEN 4 Annex 1R) relates to the presentation of those statements, which includes, for example, the use of images, symbols (such as shields, ticks, padlocks) and wording in addition to the relevant required disclosure statement. Firms are reminded to present and communicate information in a way which is clear, fair and not misleading.
The FCA has previously issued a statement on their website confirming that firms are not allowed to use the FCA logo without permission.
Firms must not indicate or imply that they are regulated or otherwise supervised by the FCA in respect of business for which they are not regulated by the FCA (GEN 4).
Where adverts refer to the FCA and use images or symbols, firms must ensure that these adverts comply with their requirements. Where they identify firms who are in breach of the rules, action will be taken.