Credit promotions still not meeting regulatory standards

Published on

Financial Conduct Authority

The Financial Conduct Authority (FCA) has reported that some promotions for financial products are still falling short of its rules and firms need to do more to ensure that advertisements do not mislead consumers.

Since 1 April, the FCA has reviewed over 1,500 financial promotions for consumer credit products. The rules state that all promotions must be clear, fair and not misleading for consumers.

In the same period, the FCA has opened 227 cases about non-compliant promotions for products such as payday loans, debt management services and credit brokers. A quarter of these cases relate to advertisements for high-cost short-term credit, with many not prominently displaying a risk warning or representative APR. 80% of consumer credit cases to date relate to digital media, such as websites, emails and text messages.

Clive Adamson, director of supervision at the FCA, said: “It is important that all firms ensure financial promotions are fair, clear and not misleading so that customers are able to make informed decisions. We are disappointed to see standards fall short of what we expect, particularly in the consumer credit space, four months from when we took over regulation. We believe that firms in this sector can do more to ensure financial promotions meet the standards we would expect and will continue to monitor performance in this area.”

Examples of financial promotions which did not meet the regulations included:

  • Advertisements for fee-paying debt management firms that did not make it clear that services are not free of charge
  • Promotions that guaranteed firms would provide credit regardless of customers’ circumstances
  • A logbook lender who provided misleading information about its APR, made unclear comparisons between its rates and those of other lenders, and implied its services were endorsed by the FCA
  • Internet search terms that took consumers to unrelated sponsored links, for example, a search for ‘government debt help’ returned a sponsored link for a loan, potentially misleading people to believe the firm was offering government assistance when this was not the case.

Firms have responded positively when contacted by the FCA and have been quick to make changes to promotions that do not meet the standards. The FCA will continue to monitor financial promotions and take action where required to drive up standards. The FCA acts on complaints received from the public, the Advertising Standards Authority and other organisations.

Latest POLL

COMMENT ON MORTGAGE SOUP

We want to hear from you!
Leave a comment and get the conversation started.
You need to register to post, so please login or sign up below.

Latest articles

MPowered launches YouTube show to demystify homebuying

MPowered Mortgages has created a new YouTube series, On the House, aimed at helping...

Square 1 Media announces May Mortgage Market Debate

Square 1 Media is to hold its next Mortgage Market Debate on Wednesday, 21 May,...

Coventry BS maintains status as one of the best workplaces

Coventry Building Society has been named one of Great Place to Work's UK’s Best...

Atom bank breaks Near Prime record

Atom bank has reported another record-breaking month for Near Prime activity. Over the course of...

Other news

MPowered launches YouTube show to demystify homebuying

MPowered Mortgages has created a new YouTube series, On the House, aimed at helping...

Lenders must step up on high LTV products

Things are on the up for borrowers with a smaller deposit. The financial information...

Square 1 Media announces May Mortgage Market Debate

Square 1 Media is to hold its next Mortgage Market Debate on Wednesday, 21 May,...