Website sweep
The Financial Services Authority tested 77 firms' websites. Most
met the FSA financial promotions requirements, but 25% were
"difficult for consumers to navigate and failed to sign-post key
information," according to an FSA statement published
yesterday.
Sites were criticised for "not placing enough emphasis on the
customer journey and general website design when placing key
information." The FSA also found evidence of poor website
maintenance, resulting in out-of-date or incorrect information
being provided to consumers.
Other examples of bad practice included failing to give
advantages and disadvantages the same weight and prominence in the
same web page, burying fees or exclusions, making it too easy to
bypass risk information, and poor use of font, colour and text
boxes. The FSA has published a list of
examples of good and bad practices.
Sponsored links
The FSA has also reminded firms that sponsored links can be
financial promotions – and therefore must be fair, clear and not
misleading. The FSA studied 200 sponsored links and found mortgage
advice being advertised as free when it was not, and low interest
rates advertised that were either unavailable or subject to onerous
conditions that were not disclosed in the ad.
The FSA found that 23% of the sponsored link ads for general
insurance promised price savings but failed to substantiate the
percentage of individuals receiving that saving.
The challenge for advertisers of sponsored links is to attract
consumers and comply with these FSA rules in a very limited space.
Google's market-leading AdWords service accommodates a headline and
two lines of text that in total cannot exceed 95 characters. But
the FSA has criticised a choice of wording that is common to many
adverts for financial products.
It gave a fictional example of an ad for the
keywords "car insurance":
The FSA considers that these ads would create an expectation in
customers' minds that they could receive the savings quoted because
they fail to substantiate the percentage of people actually
receiving the savings.
OUT-LAW asked the FSA how advertisers should fit price claims
into the limited space of an AdWords ad without breaching its
guidance. A spokesman acknowledged the challenge; but he said it
would not be sufficient for the landing page to qualify the
promise of the text ad, however clear that qualification might
be.
The FSA is asking advertisers to go further than Google's own
guidelines
for AdWords. These state: "If your ad includes a price, special
discount, or 'free' offer, it must be clearly and accurately
displayed on your website within 1-2 clicks of your ad's landing
page."
But even an explanation on the landing page could be
insufficient for the FSA's purposes.
"If it becomes immediately apparent once you click through that
the criteria are such that you stand little chance [of qualifying
for the top saving advertised], that is a problem," he said. "How
many people experience [the saving advertised] in reality?"
"The impression created by the promotion has to accurately
reflect the experience that the consumer is likely to have," he
said. "If it's up-front that, say, one in five benefit from this
discount, that's clear and fair."
An unqualified statement in a text ad that you can "save up to
£155" is unacceptable if most consumers will not save that sum, he
warned. "If most consumers don't receive that saving, it's not good
enough," he said. "It's not good enough if just a small proportion
receive that."
Asked how ads can substantiate figures within a small number of
characters, the spokesman said the FSA does not want to be
prescriptive. He observed that brand advertising, rather than
product advertising, presented few problems in the FSA research;
but he also confirmed that the FSA is not suggesting that firms
should avoid all reference to potential savings in text ads.
Is this how ads should be written? (An OUT-LAW example, not
an FSA example)
The FSA said that 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," said the FSA's guidance. "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."
The FSA spokesman told OUT-LAW that its reference to "negatively
excluding terms" is about making sure you do not display an ad for
your services as a firm of financial advisers when someone searches
on "independent financial advisers" unless you are in fact
independent. Its researchers saw ads for firms that were not
independent in response to this search term.
Exclusions like this are possible with the major sponsored ad
programmes. In Google, an advertiser can sponsor "financial
advisers" and list the term "independent financial advisers" in its
'Negative Keywords'. In Yahoo!'s service, the term would be listed
as 'Excluded Words'.
The FSA also found that a search for 'guaranteed returns'
returned ads for firms whose investment products were linked to the
performance of stocks and shares where returns could not in fact be
guaranteed. And a search for 'free advice' included links to firms
whose advice was not free.
Enforcement action
Fines are a possibility for non-compliance, but the enforcement
approach is typically to ask firms to withdraw or amend their ads,
the spokesman said. "We speak to firms and ask them to justify
their ads," he said. Fines are a last resort and the size of a fine
"depends on factors like the nature of the breach, the potential
detriment, the actual detriment and size of firm," said the
spokesman.
The regulator has contacted the firms that appeared to break the
rules, but has not named them. That decision prompted criticism
from Which?, the consumer group. It wants a 'naming and shaming'
approach and told The Times newspaper that the FSA should
"police by example." The FSA countered that it was prevented from
naming firms under the confidentiality rules of the Financial
Services and Markets Act (FSMA). Offenders can only be named after
being found guilty under the FSA enforcement process.
The FSA said it will be carrying out a further review in March
2008 and will take action if it finds further failings. In the
meantime, it encourages consumers to
report misleading promotions.
The FSA has referred some findings from its sponsored links
research to the Office of Fair Trading, where advertisers were
outside its regulatory remit. It said that it is collaborating with
the OFT to produce a guide for firms on sponsored links.
