Blow the whistle

By HELEN MONKS
Updated:

 

INVESTORS are to get their own complaints hotline to shop Isa and unit trust providers who entice consumers with misleading claims about their products.

The move comes as part of the Financial Services Authority's policy statement on financial product promotions, which encourages consumers to spot and challenge unsuitable advertisements.

The new policy also bans investment companies from trumpeting the advantages of a product in an advertisement without giving similar weighting to the key risks. At present, guidance on risk can be all but lost in the small print.

Previous research by the FSA showed financial promotions play a significant role in consumer decisions. They can also set customer expectations at an unreasonably high level.

Christine Farnish, FSA consumer director, says: 'Current market conditions put the spotlight on areas that need particular attention, including a lack of balance between the benefits and drawbacks of a product.'

The regulator says it is also progressing on work to develop a standardised the presentation of the past performance of investment products.

It is likely this will stipulate investment companies can no longer use past performance as the predominant message in an advertisement and also move the tacit link adverts make with past performance and future returns.

The warning that past performance is no guide to the future is set to be removed from the small print and placed in the main text of the advertisements.

In the same consultation, the regulator proposes that ads for bond funds that include information on yields should contain both the income and the redemption yield. It is hoped this will give consumers a balanced view of the short and long-term prospects for the fund.

To see the consultation and policy statement in full go to the FSA website.

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