Sixty Seconds on Regulation

Felix Thomson

Content Executive

The Financial Services Forum

As usual, we asked some people who should know for some succinct comments on any aspect of regulation. Here’s what three of them told us.
Advertising within the rules
You know something is wrong when you spend time longingly admiring car advertising and marvelling at the simplicity of it all. I’ve got in front of me the Peugeot ad for the new 107 City Bug which is apparently “the drive of your life”. Fun, colourful ads that say a lot – with no copy at all. And as I am in the market for a small run-around, it has made me think that I’ll go and have a look in the nearest dealership, and of course find out what the experts – like Mr Clarkson – think. But the point is that the City Bug is now on my radar, and I’m going to find out more.
Now I am turning to the money pages (it’s a Wednesday). There are no ads for investments or savings or any other more complex, regulated products. I suspect that’s partly because of the new FSA guidelines and the amount of risk warnings that now have to put into any ad. It makes it difficult – if not impossible – to advertise compellingly the products we are looking to sell – especially in press sizes of 25x4s or smaller.
Which is a shame, given that the savings ratio is at its lowest level for the last twenty years or so. And because any ad (like the Peugeot one) can only work by making consumers who are in the market stop, find out more – and then perhaps buy.
And it is in the second part of the selling process, when someone has responded to an ad, that the risks and downfalls, as well as the upsides, need to be presented to the consumer. Of course they do. But we also need to educate consumers that there is also a risk of (deep breath) not taking a risk, which could result in their not being able to afford the lifestyle they want in retirement, or pay for their child’s university fees, for example. People know there are intrinsic risks when they drive – a tyre could blow out or an on-coming car could swerve across the road. But we don’t highlight these risks in car ads because we all know it.
So I do believe that the best thing the FSA could do – rather than weighing ads down with copy about the cons as well as the pros of a product – is to continue to step up its education programme so that customers are better equipped to make these judgments.
To read the full article, please download the PDF above. 

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