News - Regulation
The chief executive of the Financial Services Compensation Scheme (FSCS) Mark Neale has defended his organisation's multi-million pound spend on marketing, saying it will help protect the industry from detrimental consumer behaviour.
Last August, the FSCS announced an industry-funded (currently by the deposit sector) consumer awareness campaign starring Sherlock Holmes actor Benedict Cumberbatch.
Now, Neale has defended a new £3.6m campaign in his monthly blog post Perspectives, saying there was evidence of detriment to the industry should the marketing efforts not proceed.
"Let me start by saying that raising awareness cannot be an end in itself," he wrote.
"We only spend money on marketing where doing so helps to meet [the] FSCS's mission of underpinning consumer confidence in financial products and stability. We do it for a hard business purpose.
"To put it another way, we must have evidence that lack of awareness is detrimental to the industry and consumers: either where people are steering clear of useful products because they're unaware of our protection and think those products are riskier than they really are; or where people are taking on risks unknowingly assuming FSCS will protect them when we can't."
For instance, awareness of FSCS protection will help prevent savers from pulling their money out of a troubled lender in any future crisis, thereby worsening an already-troubling situation, he wrote.
The campain will remind savers of the £85,000 protection limit that is in place and make clear that savers "should not expect the government to meet unprotected amounts".
"People need to know there are limits to our protection," he wrote, while mulling a future extension of the awareness work to insurance and investments.
But he added: "Marketing may not be the answer in all cases. There may be better ways of reaching consumers, for example, about investment protection."
Neale said the FSCS would continue to work with the industrty, particularly trade bodies that have been a part of the Consumer Awareness Advisory Panel, as, ultimately, "the industry is one of the best ways of reaching consumers".
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