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New law prompts forecourt rethink

New laws coming into force on October 31 will change the way motor retailers promote credit in their adverts and on the forecourt.

New credit advertisement regulations spell the end of “Headline Monthly payments”. Lawco Consultancy Ltd, specialist Trading Standards advisers to the retail motor industry, report that major changes coming into force on 31st October will dramatically change the way retailers promote credit in adverts and on the forecourt.

The Office of Fair Trading confirmed on Friday that the new regulations ban “cherry picking” of monthly payments, in other words using bold headlines such as ‘only £100 per month’ and giving the detail in an example in the small print.

Phil Knight, managing director of Trading Standards advisers Lawco Consultancy and a former senior trading standards officer, says: “The new Consumer Credit Advertisement Regulations are designed to be easier to interpret. However, they will cause a major rethink by retailers and their advertising agencies in the way credit is promoted.

“What was the full finance example must now be as prominent as, and with, the monthly payment. This effectively means the use of lists of monthly payments in adverts and two-foot high monthly payments on cars in the showroom will have to end.”

The new regulations remove the requirements for simple, intermediate and full advertisements and outlaw the common phrase ‘written quotations on request’.

There will be certain triggers, which require full financial information and a typical APR. This APR must represent 66% of the business expected to be achieved as a result of the advert, it must also be printed one and a half times as prominent as certain financial information such as the monthly payment.

The Consumer Credit (Advertisements) Regulations 2004 come into force on 31 October. The OFT has published a FAQ sheet which can be downloaded from www.oft.gov.uk/News/Press+releases/2004/173-04.htm.

Failure to comply is a criminal offence and continued contravention can affect trader’s consumer credit licences.

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