FSA Hands Out First Fine For Misleading Advertising

by Robert Lee, Tax-News.com, London

27 March 2002

The UK's Financial Services Authority (FSA) has issued its first fine for misleading advertising to DBS Financial Management PLC, a support network for Independent Financial Advisors (IFAs).

The FSA made its decision following DBS's approval of a 24 page colour supplement from member firm EnsureDirect.com, which was distributed in around 4.5 million national newspapers. This literature outlined complicated investment products, among them the so-called 'Protected ISAs'. The FSA deemed that the target audience of the advertising campaign was unlikely to have a sufficient understanding of these investments and that therefore customers would be unable to make a fair assessment of the products or the risks involved.

"This is the FSA's first fine for misleading advertising. We require financial advertisements to be 'clear, fair and not misleading.' The direct offer advertisement for 'Protected ISAs' that was approved by DBS did not come close to meeting this standard," said Carol Sergeant, the FSA's Managing Director. She added: "The fine would have been much higher if DBS had not fully co-operated with us by overhauling its advertising approval procedures and offering the 455 investors who responded to the advertisement their money back."

Meanwhile, EnsureDirect.com appears to have ceased trading since the judgment was made, and DBS was the subject of a take-over from Misys Life and Pensions who control five IFA networks.

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