An initial assessment of promotional material being used by consumer credit firms has found that almost one in five do not comply with the Financial Conduct Authority (FCA)’s rules in this area.

The FCA commenced regulation of the consumer credit sector on April 1, and six weeks later it revealed that since its responsibilities commenced, it had reviewed 554 promotions, and that 108 of these, representing 19.5% of the total, breached its rules in some way.

Of these 108, 38 were from payday lenders, while 19 were from other lenders or from credit brokers and 18 were from debt managers.

All credit firms should take note of the issues identified, and re-check their promotional material to ensure that the same failings cannot be laid at their door. Issues identified across the credit industry include:

  • Encouraging applicants to press the Apply button on a website before they have considered important information
  • Targeting under 18s
  • Incorrectly suggesting a credit product would repair the borrower’s credit rating
  • Suggesting a credit product would ‘clear’ the borrower’s debt, when in fact one form of borrowing would be replaced with another

Issues relating to specific firm types include:

Payday loans

  • Not giving the required risk warning – “Late repayment can cause you serious money problems. For help, go to: moneyadviceservice.org.uk.”
  • Failing to state fees, or not displaying them sufficiently prominently
  • Not giving the Annual Percentage Rate (APR), or encouraging customers to disregard it
  • Failing to explain the risks of not repaying the loan

Debt managers

  • Failing to acknowledge that whilst monthly payments may decrease, total repayments and/or the term of the loan will increase
  • Misleading statements about interest freezes

Home collected credit

  • Misleading comparisons as to the type of customer they might lend to when compared to the banks
  • Misleading explanations of APR

Logbook lenders

  • Failing to acknowledge that non-repayment may result in re-possession of a car or other assets


  • Failing to acknowledge that non-repayment may result in re-possession of the assets offered as security
  • Not stating the APR

The FCA has acknowledged that most firms have been quick to make amendments where issues were identified. Many of the promotions have now been amended or withdrawn.

Clive Adamson, director of supervision at the FCA, said: “It is particularly important in this sector that advertisements for financial products enable customers to make informed decisions. We think that more can be done to ensure that advertisements are fair, clear and not misleading.”

The FCA has an ongoing programme of supervision of the firms it regulates, which includes a series of visits to firms’ premises. But even if a firm is not visited by the FCA, its promotional material may still be highly visible if it is broadcast on TV or radio, or printed in a newspaper. Firms should also be aware that their website is also considered to be a financial promotion, as is an email or postal marketing campaign.