FSA in crackdown on misleading ads

The FSA, the City watchdog, announced a crackdown yesterday on misleading advertising by financial services companies, launching a whistle-blowing hotline and creating a 30-strong department to police financial marketing material.

The FSA, the City watchdog, announced a crackdown yesterday on misleading advertising by financial services companies, launching a whistle-blowing hotline and creating a 30-strong department to police financial marketing material.

The move comes after a year that has seen a record number of complaints concerning financial adverts, with almost 600 cases relating to more than 350 firms. Several of the complaints have already led to the Financial Services Authority asking for adverts to be withdrawn or amended, while Chase de Vere was fined £165,000 last December for misleading marketing literature concerning "precipice" bonds.

Anna Bradley, the FSA's director of retail themes, who will head the new division, said: "We hope that firms will make use of the new hotline, as well as consumers. Consumers can pay a heavy price when they buy a financial product as a result of a misleading advert. But the industry also pays a heavy price when their reputation is damaged."

The FSA also revealed yesterday that it had written to the chief executives of companies that sell investments for children, warning them to be especially careful of how they promote the products. It said firms should be very careful to warn of the risks if savings products are linked to the stock market, and should not refer to products as "safe" or "secure" if there was any risk to capital.

It said: "Many consumers may not see the difference between the 'savings plans' referred to in these promotions, which include an equity-linked element, and safer methods of saving such as regular deposit accounts ... Financial promotions should provide adequate information, which the target audience is able to understand."

The FSA's hotline number is 08457 300168.