'More than three-quarters of UK financial services ads are misleading'
Virgin Money's cancer-only cover, which was heavily criticised when it first launched in early 2005, has come under fire again after a study attacked firms using scare statistics when selling products.
The Grant Thornton study, which examined 94 financial services firms, revealed that more than three-quarters of UK financial services advertisements and promotions are misleading, saying the vast majority failed to meet the requirements set out by the Financial Services Authority.
After investigations of companies' promotions, including newspaper advertisements and websites, the firm discovered a range of malpractices. These included firms using scare tactics, such as saying "one out of three will get cancer in their lifetime" but failing to point out that some forms of cancer may not be covered by the product.
Several commentators argue that Virgin Money's cancer cover advertising campaign could be accused of this.
Mike Naylor, principal researcher at Which?, said: "We think Virgin's advertising on its website could mislead people into thinking they would be covered by its policy when they may not be. It quotes a figure that one in six people will get cancer before the age of 70, but it doesn't make clear that exclusions mean you may not be covered by its policy."
Mark Locke, PR manager at Scottish Equitable Protect, said: "Saying one in three people will get cancer in their lifetime is vastly different from saying one in three who get cancer will be protected if they buy a company's critical illness policy. Any company that implies this, directly or indirectly, through a financial promotion could be accused of misleading their customers."
Virgin Money rebutted the accusations. "We do not employ scare tactics when selling Virgin Cancer cover. We use a fact-based awareness campaign, which is all about education. You can hide behind the facts because they are uncomfortable, or confront them and get the peace of mind that financial protection affords. Our critics call this scaremongering as it helps with their PR," said Scott Mowbray, head of public relations at Virgin Money.
Mowbray revealed that a competitor had complained to the Advertising Standards Authority about the firm's adverts, but the complaint was rejected.
Grant Thornton refused to point the finger at any one firm.
However, Dee Crooks, Grant Thornton spokesperson, said: "There are a few companies that use this information in their literature so it would not be fair to just name Virgin Money."
The research also found that many firms advertised deals or cheaper premiums for "headline-grabbing" purposes when they are not available in practice, and some suggested their premiums were cheaper than a competitor's by comparing a basic product with a more comprehensive one.
