The financial services industry regulator, the Financial Services Authority (FSA), has issued a paper confirming that there is going to be a re-vamp of advertising standards for investment performance.
In simple terms, financial advertisements, when making claims about performance will be required to show actual returns over 12 month periods for the last five years.
Our View
About time! Our team sits and reads press advertisements or watches the television in disgust at the all too frequent, in our opinion, mis-leading claims by certain providers. "Consistent performance" and "consistently well" are phrases that are commonly used and the reality behind the facts is not necessarily the truth and can leave savers and investors with a false sense of security.
"Consistent performance" could be consistently bad and for some, particularly one leading heavily advertised brand, "consistently under performed peer group providers over a range of sectors in the last ten years with appalling service" would be a more accurate statement!
We welcome this move to greater transparency by the FSA!