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An interesting story is just breaking, Labour MP John McFall, chairman of the House of Commons Treasury Select Committee, has sent a letter to the Financial Services Authority (FSA) saying that it should do more to highlight poor advertising practice among banks, insurers and other firms offering loans.

He said the FSA offered “no scrutiny and little incentive for advertisers to keep to the rules”.

This follows a report in July by The Financial Services Consumer Panel, which independently advises and monitors the FSA on its policies and activities that said it had found a “worrying” level of rule breaches in advertising by financial firms.

The Panel said a ’snapshot survey’ showed 57% of financial promotions did not comply with advertising rules, including 79% of general insurance promotions and almost half of all mortgage promotions. It said this indicated several thousand advertisements were of medium to high risk each year.

The FSA said it had taken 12 enforcement actions against financial promotions in the last two years, resulting in fines of 1.5 million pounds, and since April 2004 it had pursued 820 cases of misleading advertising.

McFall said the FSA should look at the Advertising Standards Authority model, which involves naming advertisers that break its rules and a clear record of its judgements, to assess whether any of its aspects would be useful in financial advertising.

With regards to Secured Loans this is interesting because in May and then later in July the FSA and OFT said it had combined forces to produce guidelines for producing compliant financial advertisements. Given that the OFT is equally responsible for some areas of the compliancy of loan advertisement it is strange that the MP McFall didn’t also direct his attack at the OFT.

Perhaps we will see a further development in this that, if it happens, will undoubtedly affect the secured loans industry.