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There is a story floating around in the news at the moment about loan adverts and price comparisons being put under the microscope by the Advertising Standards Agency (ASA).

The ASA has said that social responsibility will be a key issue when looking at complaints on adverts offering credit. The watchdog also said various landmark rulings have set the standards which advertisers must adhere to.

It has ruled against firms that misled viewers or trivialised the issue of consolidating debts.

The ASA report said that the economic downturn affected the quality of advertising and the kind of appeals made to consumers.

This is all very well and I broadly support the measures, but they still make me angry. Where were the ASA and the FSA during the boom years when credit was being thrown about like water?

The attention of government, parliament, the media and pretty much everyone else is focused at the moment on the consequences of bad debt and so it seems that these measures, although useful, are little more than opportunistic band wagon jumping.

In its annual report the ASA said, “the economic downturn makes it even more important to protect consumers from being misled.” This is true, but a little more vigilance for the past ten years rather than ten minutes, could have stopped a lot of people getting into bad debt in the first place.

The ASA’s chairman has said the agency needs to be “vigilant” on behalf of the consumer. This is true, but it has not just become true in the last year. Where was the vigilance when debt ‘management’ companies were filling the advertising slots of daytime television with their phoney advice and misleading suggestions?

It must be said, however, that the action being taken is better late than never.

Adverts, including a growing number online, for financial products and price comparison websites have been among those targeted this year.

This included banning a television advert for Picture Financial Services which showed a man playing football and being filmed by his wife at the same time as applying for a loan on the telephone. The ASA Council found the advert to be misleading for implying that consolidating unsecured loans was a decision that could be taken lightly.

Others were banned for not outlining the key conditions of a loan or because they seemed to encourage irresponsible spending.

There has also been a steady rise in the number of complaints about adverts which made comparisons based on price.

The issue of adverts for loans has come up just as the Finance and Leasing Association (FLA) has said that new business for unsecured loans had dipped significantly in the first two months of 2009.
For those who have not been keeping up, an unsecured loan is a loan where the lender does not use the customer’s house as security, and the FLA said that rising unemployment and low consumer confidence had hit demand for this type of credit.

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Firstly, let me apologise to regular readers of this blog for the disruption of service recently. A lot has happened while I have been away so I will try to catch up as quickly as possible.

Let’s begin with a fun story on one of my favourite topics, the banks. In what will be one of the most applauded moves ever from the Financial Services Authority (FSA), they are proposing to fine banks which do not offer an acceptable standard of service.

At present, consumers are protected by a voluntary code that offers guidance on how banks should behave towards retail banking customers. This does not carry the threat of fines. The FSA is aiming to replace the existing voluntary code with a tightened and enforceable set of rules and regulations that would apply to all major financial institutions.

It is hoped that this will ensure customers are treated fairly and are kept informed as well as make it easier to switch accounts.

If the proposed changes go ahead, the FSA will oversee how banks deal with their day-to-day customers, with a team carrying out mystery shopping exercises to make sure they are being treated fairly.

The rules will include measures to make it easier for people to switch accounts between different providers, and they will also be given more notice of interest-rate changes.

The FSA has in the past been critical of institutions for delays when customers wanted to switch their cash Individual Savings Account (ISA) to a different bank or building society. It will now require banks to provide prompt, efficient and fair service for their customers, and offer information about their accounts at the appropriate time.

Before the new rules come into force the FSA will publish comprehensive information for consumers detailing their rights and outlining what they can expect from their bank or building society.

A spokesman from the consumers’ association Which?, said of the proposals, “The FSA has to get tough as a regulator and use its full range of powers to keep banks in check. If it relies on the industry to develop its own code, consumers could find themselves worse off. Instead of closing the stable door after the horse has bolted, it must be proactive in finding and dealing with problems or consumers will lose out.”

Responsibility for treating customers fairly over borrowing, such as overdrafts and credit cards, will remain with the Office of Fair Trading.

I can’t help but wonder why the requirement that the banks provide prompt, efficient and fair service and offer information about their accounts at an appropriate time, requires any legislation or intervention from a watchdog at all. However, this is the situation we are in.

I for one look forward with glee to the day my account is credited by my bank because I have received poor service from them. I imagine many people will make extra visits to their local branches.

Looking at the wider picture, however, this is a long overdue measure that continues the power shift away from the large banks and back to the consumer.