ISBA Warns Against New Financial Ad Regulations
ISBA has warned that the introduction of past performance statistics in pension advertising could seriously reduce the amount of financial product advertising produced.
The Financial Services Authority is proposing new restrictions on the way past performance statistics are used to sell financial service investment products, believing they are not a reliable guide to future performance.
ISBA has reacted by claiming that the new regulations “misunderstand the role of advertising” and, if introduced, would lead to financial service providers ceasing to advertise individual investment products and services in favour of greater generic brand advertising.
The advertising group also argues that the new regulations would generate immediate costs for the industry if, as proposed, they were introduced with only a three month transition period. According to ISBA, preparation for advertising campaigns often takes considerably longer than three months, meaning that already created marketing plans would have to be scrapped.
Ian Twinn, ISBA’s director of public affairs, said: “The FSA’s proposals to regulate the use of past performance data appear to rest on a fundamental belief that this is never relevant information for the consumer. ISBA does not believe that the FSA has satisfactorily established this fundamental point.”
He added: “The FSA’s proposals will reduce the effectiveness of financial service product advertising to the subsequent detriment of both businesses and consumers. The proposals may result in advertisers needing to spend more on advertising to recoup this lost effectiveness. Alternatively, they may result in companies reducing their advertising of individual investment products and services in favour of greater generic brand advertising, therefore ultimately denying the consumer to legitimate product information. We are urging the FSA to reconsider its plans.”
Last August ISBA gave its backing to reviews by the Department Of Trade And Industry and the Financial Services Authority into financial advertising standards. Both organisations are seeking to simplify the regulations surrounding financial services advertising to focus on essential information rather than detailed legal jargon (see Financial Advertising Shake Up).
ISBA: 020 7499 7502 www.isba.org.uk
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