FSA censures Axa over misleading adverts

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The Independent Online

Axa Sun Life, the insurance giant, was fined £500,000 by the Financial Services Authority (FSA) yesterday for misleading advertising, after two high-profile campaigns, fronted by June Whitfield and Carol Smillie, were deemed to have understated the risks to investors.

Axa Sun Life, the insurance giant, was fined £500,000 by the Financial Services Authority (FSA) yesterday for misleading advertising, after two high-profile campaigns, fronted by June Whitfield and Carol Smillie, were deemed to have understated the risks to investors.

Adverts for the Bonus Cash Builder Plan Plus, a with-profits endowment policy, which were run in national newspapers and on television between January 2002 and April 2003, were found to have contained inaccurate performance data. Although Axa corrected the adverts, which featured Ms Smillie, as soon as they discovered the error, they failed to notify the FSA of their mistake until an inquiry was made by the regulator seven months later.

The June Whitfield campaign for Axa's Guaranteed Over 50 Plan, a life insurance policy, was also criticised by the FSA, for failing to provide customers with sufficient detail of how the product worked, or the risks involved. The policy promises to pay out a lump sum to the policyholder's family in the event of their death, but includes hefty penalties for those whocancel their policy.

The fine is the highest handed to a financial services company for misleading advertising. However, the FSA conceded that Axa had helped reduce the size of the penalty by co-operating with the regulator's inquiry, and agreeing to offer customers the option to cancel their policies and receive a full rebate of premiums plus interest. Andrew Procter, the director of enforcement at the regulator, said: "The FSA takes the issue of misleading financial promotions very seriously. We expect firms to comply with the spirit, not just the letter, of the rules, so that consumers gain a clear and fair understanding through the promotion.

"We set up a financial promotions hotline in July this year and we urge any customers who see advertisements they believe breach these fundamental rules to report them to us. The hotline has made it much easier for consumers and firms to report adverts they believe flout the rules and will enable us to act quickly and if necessary remove the offending material before someone loses out."

Axa accepted its fine yesterday, saying it regretted the shortcomings in its adverts. Paul Evans, the chief executive, said: "We take our commitments to our customers extremely seriously and work hard to ensure that our advertising is as clear as possible. We voluntarily appointed an independent third party, Ernst & Young, to review systems and controls relating to our financial promotions and have acted on all the recommendations in their report."

He added: "AXA Sun Life is pleased that the regulator has placed on record that we have been 'thoroughly open and co-operative' throughout their investigation and that AXA 'should receive considerable credit' for the restorative action we have taken."

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