FSA and Web Promotions of Financial Services

November 30, 2007

Over a period of 12 months, the FSA has been carrying out a review of financial promotions on the Internet, focusing on 130 Web sites. It has concerns arising from  the Internet’s ‘immediacy and ability to link online advertising to online direct sales it potentially presents a high risk to consumers’. The aim was to reflect the journey of the ordinary consumer and to compare that experience with the numerous checks and balances which the financial services legislation and codes of practice require to be in place – most pointedly the many warnings about investment risk with which we are all familiar.


They found that 25% of Web sites fell short of the requisite standards ‘This is partly because firms are not placing enough emphasis on the customer journey and general website design when placing key information. In some instances general website maintenance was also lacking, resulting in out-of-date or incorrect information being provided to consumers.’ The FSA wioll be carrying out a further review in March 2008 and, having drawn the attention of certain firms about their concerns, ‘will not hesitate to take direct action’ if the shortcomings are not addressed.


The FSA has published useful examples of good and bad practice in this area. Click here to access them.


Given that this Web site has been banging on about poor maintenance of sites and the open breach of advertising regulation, the trade descriptions legislation and other consumer protection regulation for years, we can only say ‘Hallelujah’. The FSA is to be congratulated on its intitiative.


On sponsored links, which had been the subject of a review during October and November 2007, the FSA say:


Increasingly we see firms using sponsored links to promote their products and services. Depending on their content, a sponsored link may also be a financial promotion – that is, when they induce consumers to take out a regulated product or use a firm’s services. Authorised firms must ensure all their communications, including sponsored links, are fair, clear and not misleading.

Our review of over 200 sponsored links identified a number of areas where firms fall short of the required standards, for example:

·                                 low interest rates which were either unavailable at all or which were subject to extremely onerous conditions which were not disclosed;

·                                 links returned from an impaired credit search lacked any APR information;

·                                 instances where mortgage advice or independent advice was advertised as being free when either this was not the case or it was unclear whether it was.

There were also some examples of general insurance price savings claims not having a substantiation of the percentage of individuals receiving that claim. Of the 47 sponsored links reviewed during October and November 2007, 23% were deficient in this regard.

There are also instances where the sponsored link returned by a search engine may be compliant on its own but could be misleading by omission when taken in the context of the particular search term used. Firms should pay particular attention to the search terms they purchase or instruct media agencies to purchase from search engine providers. They need to assess whether purchasing a term has a potential to create misleading expectations. Firms should also consider negatively excluding terms in the search terms purchased in order to ensure that their sponsored links do not mislead consumers.

Our initial research into those sponsored links returned from searches on a range of financial products and services identified links to websites that did not accurately reflect the expectations created by the search term used. For instance:

·         ‘independent financial advisors’ included those for firms that were not independent – carrying the risk that consumers may be misled into dealing with firms that are not independent;

·         ‘guaranteed returns’ included those for firms whose investment products were linked to the performance of stocks and shares where returns could not in fact be guaranteed;

·         those relating to ‘free advice’ included links to firms whose advice was not free.


Again the FSA has contacted certain firms to ask them to avoid creating misleading expectations. They are collaborating with the OFT to produce a guide for firms which pay to advertise via sponsored links.


For the FSA’s full release on sponsored links, click here.