Company: Axa Sun Life
Record fine for Axa's unclear ads
|21st Dec 2004
||Questionable Business Practice
|Insurer Axa Sun Life has been fined £500,000 for its misleading TV adverts - the highest such fine ever imposed by the City watchdog.
The Financial Services Authority (FSA) said adverts for Axa Cash Builder Plus and its guaranteed over-50 investment plans did not alert consumers to risk.
The FSA said the "design, content and format" of the adverts focused attention on benefits rather than risk.
FSA enforcement director Andrew Procter said the agency was getting tough.
"We expect firms to comply with the spirit, not just the letter, of the rules, so that consumers gain a clear and fair understanding through the promotion," he said.
"If a firm's financial promotions fail to meet our requirement to be fair, clear and not misleading, and the firm fails to treat its customers fairly, we will not hesitate to act."
The Axa Cash Builder Plus is a with-profits endowment policy, which offers a guaranteed cash sum on maturity and life insurance throughout the investment period.
However, investors who choose to cash in their policies early can find that they receive significantly less than the value of the premiums paid in.
Similar penalties for early cancellation apply to the guaranteed over-50 plan.
The FSA felt that the risk that policyholders would not get all their money back was not made clear enough in TV and national press advertising featuring stars June Whitfield and Carole Smillie.
The FSA statement said: "The failings identified in this case are serious and merit a significant penalty."
The watchdog added that the fine would have been greater if Axa had not co-operated with its investigation.
Earlier this year, the FSA strengthened advertising rules for products where people's initial investment is at risk.
The watchdog told firms it would look dimly on adverts which selectively quoted or cherry-picked performance figures to sell an investment.