Insurance firms have been told they face action if they continue to run adverts which make misleading savings claims.
The (FSA) issued the warning following a review of press advertisements from 57 firms selling motor, home and travel insurance.
The financial watchdog found that more than half of motor insurance advertisements with savings claims were either unclear or misleading.
The FSA says insurance advertisements can be misleading if they give the impression that most consumers are eligible for such savings when in fact only a few are.
They can also be unclear if the basis of the savings claim is not clearly set out.
Vernon Everitt, FSA Retail Themes Director, said: ‘Most people rely on some form of insurance to protect them and advertising is a major influence on what they choose to buy. So it must be clear, fair and not misleading, leaving people with a balanced picture of what’s on offer.
‘This work demonstrates that firms in the home, travel and car insurance markets must shape up and ensure the claims they make don’t mislead. We will be back in three months to assess progress and will then decide whether further regulatory action is needed.’
‘Name and shame’
The watchdog said it had contacted the senior management of firms required to improve the quality of their advertising.
But Which? believes the FSA should have named and shamed them. Personal finance campaigner Emma Bandey said: ‘Why is the FSA consistently reluctant to name and shame firms? These ‘savings claims’ adverts are a major influence for people looking to buy insurance.
‘The Advertising Standards Authority, which looks after non-financial promotions, publishes complaints on its website. It doesn’t just tell firms behind closed doors that they have three months to improve.
‘The FSA needs to follow suit and name these adverts, firstly to incentivise companies to improve and secondly to keep consumers informed and protected.’