MEDIA FORUM: Should financial ads still have to carry warnings? - The IPA is urging the Government to abolish the wealth warnings on financial ads. What are the implications for advertising?

Is it time to ease up on the "wealth warning" requirements on

financial services advertising? The IPA certainly thinks so - in a

document produced last week it argues that the practice, which was

introduced almost two decades ago to protect consumers, has become

hollow and meaningless.

Consumers have grown up since the 70s, when legislation was brought in

that forced financial advertisers to add all sorts of riders to their

ads, whether in printed or broadcast media. Back then, it was easier to

believe in an unscrupulous world in which intimidating insurance

salesmen preyed on feeble-minded, vulnerable consumers who'd sign

anything thrust under their noses.

We've seen swathes of red tape produced since then, especially in the

90s following all those pension mis-selling scandals. Not only are

financial services companies far more responsible, but they're also

guided by a myriad of rules and regulations giving consumers every

opportunity to change their minds. There are stringent rules covering

the activities of financial advisers and salesmen and there are generous

provisions for cooling-off periods once you've actually signed on the

dotted line.

The Department of Trade and Industry is now reconsidering the whole

issue and the IPA document hopes to nudge it towards a reasoned

judgment. It argues that wealth warnings are now in no-one's interest.

They don't actually protect the consumer, they hamper the marketing

strategies of advertisers and they hurt media owners - some more than


Geoffrey Russell, the IPA's director of media affairs, says the

initiative follows up on a previous campaign by the Radio Advertising

Bureau. He states: "It has always irritated people in the radio industry

that a 30-second commercial could have 20 seconds of warning

gobbledegook at the end, usually delivered at breakneck speed. If it's

there to protect the most vulnerable in society why does it have to be

so impenetrable?"

Radio has been deprived of revenue totalling hundreds of millions

because of this. But wealth warnings arguably hurt everyone, even the

people they are designed to protect. There is research showing that many

consumers who, for example, would benefit from taking out an extra

pension, interpret wealth warnings as get-out clauses - small print

that, in itself, proves that the product is disreputable.

Russell adds: "The regulation has to be effective. A full explanation of

the product should be in the company's literature, in the point of sale

material, and in face-to-face interviews.

Advertising doesn't sell the product. All it can do is get people

interested - there are all sorts of statutory regulations and cooling

off periods where the sale of financial products is concerned."

One media owner that has been particularly frustrated about the

situation is Chrysalis Radio. So frustrated, in fact, that it recently

began a scheme whereby advertisers who have to use a warning are given

that "dead" element of airtime for free. Don Thomson, the company's

commercial director, says: "Radio has always been at a disadvantage to

other media when it comes to financial advertising because, although you

require a wealth warning on TV, it just gets put at the bottom of the

screen. This doesn't add to the length of the ad and it doesn't add to

the media costs."

Is the Chrysalis scheme paying off? Are increases in revenue more than

covering the free airtime? Thomson says it's too early to say, although

talks with the major financial sector advertisers have been


He adds: "We would certainly back the IPA initiative wholeheartedly. Our

view is that formal warnings are entirely appropriate at the point of

sale rather than on the advertising as such."

Nigel Mansell, the managing director of the outdoor specialist Concord,

recently published research showing that awareness levels had been

declining in the outdoor medium. One of the reasons for that is

creatives seem to have lost the knack of developing punchy


So surely he'll welcome any initiative that helps remove creative

clutter from the medium? "It does take up usable space on a poster - the

rules state that the warning must take up a substantial chunk of space

at the bottom - and it does impact on our ability to take revenue," he


"The point to me is not so much that it's gobbledegook - I'm sure it's

very well-meaning - but that no-one can read it unless it's a

cross-track 48-sheet on the Underground. No-one can take in the meaning.

It might have had some purpose when the financial services market was

relatively new but it's just nanny state now and, of course, it should

be abolished.

It's ridiculous. It restricts the ability of financial advertisers to

get the best out of outdoor and it is an unnecessary hurdle for those

thinking of using the medium."

Of course, you could argue that the advertising industry is in no

position to take the moral high ground here, what with so many dodgy

loan sharks running direct response ads on TV - but that, arguably, is a

whole different issue. The more you look at wealth warnings, the more

pointless they seem.

But what impact would their demise have on the media market? Would

financial advertisers seriously review their strategies?

This is true to a certain extent, Keith Moor, the head of marketing

communications at Abbey National, admits. He comments: "As wealth

warnings currently are, they're just confusing, so any initiative that

helps will be welcome." Perhaps surprisingly, though, he doesn't feel

they should be abolished completely. "We don't believe that they have to

be abolished but they should certainly be more straightforward. They

should be simplified and shortened. That would clearly be in the

customers' interests. I think they should say merely that before you

buy, someone will talk you through this."

Moor adds: "Consumers still need to be told they will be protected. When

you buy a financial product you never do it straight off the ad. That's

what wealth warnings don't take account of. They date back to a time

when there was less effective self-regulation in this industry."

But what about the budgeting and media strategy implications? Yes, there

would be some, Moor admits, but it wouldn't necessarily be a case of

winners and losers. "In the past, wealth warnings have meant that we've

used less outdoor and less radio and, on certain subjects, less TV.

We've certainly had to change our approach creatively on TV because of

the need to carry warnings. If things changed we might not shift budget

from one medium to another, but we might be tempted to spend more," he


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