/ Money

Seen a misleading financial advert? Tell us about it…

Woman watching TV

The financial sector continues to get complaints about misleading ads. Unfortunately, financial companies are rarely named and shamed for this, so we’re asking for your examples so we can investigate further.

You’d think that with all the furore surrounding PPI misselling, fat cat bonuses and low savings rates, the industry would be doing all it can to clean up its act.

But, if the number of reported dodgy financial ads is anything to go by, this doesn’t seem to be the case.

Complaints on the rise

The Advertising Standards Authority (ASA), one of the main regulators of misleading promotions, received 1,519 complaints about dubious financial ads in 2010 – 130 more than in the previous year. And these are just complaints made by eagle-eyed consumers who make the effort to complain – surely then, loads more are churned out all the time that go unchallenged?

So why are so many financial ads getting it wrong? I reckon part of the problem is that there’s relatively little incentive for the industry to get it right.

Most people will complain to the ASA in the first instance, but while this body can demand that the offending ads are withdrawn, it can’t fine companies. In any event, it tends to restrict its attention to issues of taste and decency.

We need to name and shame

Most ads deemed to infringe industry codes on fairness and transparency are passed to the Financial Services Authority (FSA). The FSA has the power to ask for ads to be altered or removed, and can impose fines. However, it doesn’t name and shame offending companies unless it issues them with a fine – which is rare.

This means that advertisers, who spend millions on promotional campaigns, probably have very little to worry about. If they’re not named, there’s no public shame, and any fine is likely to be a drop in the ocean when compared to their ad budgets.

It seems to me that the only reason that producers of dodgy ads might clean up their acts is if they develop a conscience. Somehow, with the lack of incentive, and no hard-hitting watchdogs around, I think that’s unlikely to happen.

I reckon the only way to prevent misleading financial ads is be more vocal about any complaints we have. One way you can do this is to tell us if you see one that seems misleading, and we’ll challenge the regulators on them as part of our ‘Watchdog not lapdog’ campaign.

Have you seen something suspicious in a TV ad, heard something strange on the radio or read a ridiculous claim? If so, let us know right here and we’ll look into it. It’s worth a try, isn’t it?

john mccolgan says:
29 January 2012

My own personal take on this issue is that the financial sector (now I include insurance, loan companies and the comparison companies) Are flooding our television in never ending adverts. Currently the worst offender is Direct Line although they are by and far NOT unique, next month some other “horse” will be out in front. It’s now a matter of course in our family to either channel hop to a BBC program or hit the mute button when the adverts come on. I’m old enough to remember when the public trusted the “bank manager in your cupboard” campaign and looked upon these stalwart institutions as family friends. I’m afraid they have systematically destroyed any trust the public have in ANY of them. Before my rant is over it must be asked, ” who pays for all this advertising ? ” Any guesses?

The only one that springs to mind ( I tend to ignore financial ads – not having any money and not trusting those institutions) is the original Direct Line mortgage ad. The one were they state they’ll be no introductory offers for new customers just good rates for existing ones. I didn’t believe them at the time and several months /years later oh look introductory rates for new customers.

Darren says:
31 January 2012

My growing concern is generally for supermarkets. They stock their shelves with so many products etc. it is getting so bad the item you look above the price is for something else!! They leave out of date offer tags clipped to the shelf. Its just ridiculous. I thought the basic rule of trading is ‘clearly marked goods’ So how are they getting away with?

Roy Davey says:
1 April 2012

Not an ad. but very dubious practice.

When my fixed term bond matured at Santander I was invited in to the bank to discuss reinvestment. I knew from researching the market that I was likely to get a little over 5% for a further fixed term. When I told him how much I expected to get he offered me 6% over a fixed 5 year term. Fantastic! Well it was fantastic until I asked how and when interest was paid. It turned out he was offering me a deal with simple interest paid at the end of the term which amounts to about 3.4% in most peoples’ minds.

I view this as an attempted fraud.

Steve says:
4 July 2012

I currently hold some investments on the interactive investor trading platform. They most recently changed their fee charging structure, which in itself is annoying, but that aside, my issue is the way they “sell this” change in their correspondence and website – I consider their rationale for this to be disingenous at best. They rationalise the reason for introducing charges as follows:

This an extract from their email introducing the changes:

“We believe that customers should be engaged with their investments and actively manage their portfolios. To support this, we are introducing a quarterly fee of £20. This fee is the only one we will charge you and you will not have to pay any other management, ISA or administration fee.”

and this from their FAQ:

“We want to actively encourage all our investors to be more engaged with their investments. The pre-payment for two real-time trades in advance per quarter, or the equivalent amount in trading commission, should incentivise our customers to consciously monitor their holdings and take more responsibility for their investments – which will hopefully result in a better performing portfolio.”

So, if I am not much mistaken, they appear to be encouraging their customers (me included) to churn their portfolio! apparently they are supporting me in achieving greater returns from my portfolio by charging me additional fees. Fantastic isnt it! Can this really be good advice?

It seems contrary to received wisdom that any active trading should be taken pursuant to one’s investment goals, whatever they might be, they shouldnt be ‘forced’ on you. I have never heard of such nonsense, I literally couldn’t believe what I was reading. I would love to complain somewhere where it would do any good, but this is not a service complaint, it appears to be misleading generic financial advice, which from a financial services company is unforgiveable. However, you can’t make a complaint to the financial ombudsman without going throuugh the Company complaint process. Given this is a generic email/FAQ to rationalise the charges change, clearly they are going to reject any individual complaint so it seems pointless.

Be grateful for any views?