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Recent reports have confirmed that insurance companies have been warned by the Financial Services Authority about using misleading advertisements, and have been given just a few months to review and change their advertising methods otherwise face action and fines from financial regulatory bodies in the UK.
This comes after an investigation that highlighted that many insurance companies were offering big savings to consumers when advertising, when in many cases there were no savings to actually be made.
After reviewing a number of advertisements from insurance companies the Financial Services Authority concluded that over half of the advertisements for motor insurance cover made no mention of how consumers could make the savings that were promised, and the same with around a quarter of home insurance companies. Insurance companies have now been told to quickly deal with the content and quality of their advertisements to ensure that they are not misleading.
An official from the Financial Services Authority stated: "Most people rely on some form of insurance to protect them and advertising is a major influence on what they choose to buy. 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."
The Association of British Insurers also commented, stating: "We take the FSA's concerns seriously. 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."
The Financial Services Authority took over the regulation of general insurance in 2004, and so far around twelve companies have already had action taken against them for this type of situation.
Tom Smith
26.02.07
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