Over half of motor insurance advertisements made unclear or misleading claims, while a quarter of the home insurance advertisements surveyed exhibited the same flaws, the watchdog warned.

Misleading claims included implying that a substantial proportion of customers would be eligible for savings which could in reality only apply to a minority.

Firms which do not comply with existing regulation will face regulatory action, the FSA cautioned.

“Firms in the home, travel and car insurance markets must shape up and ensure that the claims they make don’t mislead,” urged FSA retail themes director Vernon Everitt, adding: “We will be back in three months to assess progress.”

The use of unclear or misleading claims emerged through an FSA review of press advertising produced by these 57 firms, whose total advertising spend in press outlets accounted for three-quarters of spend by all providers in the market in 2006.

For more information about travel insurance, click here.

© Adfero Ltd