FCA: Firms must do more
Since 1 April, the Financial Conduct Authority 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. One in four of these related 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.
Other areas not hitting the mark included promotions that guaranteed firms would provide credit regardless of customers’ circumstances as well as 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.
Other instances included internet search terms that took consumers to unrelated sponsored links. In one case a search for ‘government debt help’ returned a sponsored link for a loan, potentially misleading people to believe the firm was offering government help when this was not the case.