The FSA will be taking severe measures to restrict misleading advertising.
The FSA has emphasised its spotlight on misleading advertising after a report revealed that 262 promotions were withdrawn in 2010 following FSA enquiries.
A freedom of information request by City law firm Reynolds Porter Chamberlain, showed that there has been a significant increase in withdrawn promotions. The report, which was published in the Financial Times, suggested that this number rose by up to 32%.
Jonathan Davies, RPC partner commented: “They have certainly stepped up their activity over the last few years. It is clear the FSA is becoming a more intrusive regulator and it wants to intervene earlier. Giving equal prominence to risks and rewards is a very judgemental concept, on which reasonable people can easily disagree.
“The FSA is increasingly forcing its view on firms. In future, a firm which disagrees with the FCA, which will be regulating this area once the FSA is replaced, will be named and shamed before the disagreement can be resolved by an independent tribunal.
“Businesses will be particularly concerned about the naming and shaming powers the FCA will have because the reputational damage that could follow a disagreement with the FCA will be very high indeed.”
The FSA has fined 14 firms for breaches in promotion more than £1.5m since 2004, calling attention to the need for retail products to carry clear risk warnings.