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FCA expresses concern at more than 200 failures to meet advertising standards

The Financial Conduct Authority (FCA) has found 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, Adamson said, 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.

> Further information about the FCA’s approach to financial promotions

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  • Kel Prince - 18/08/2014 15:43

    One of the serious shortcomings of the FSA was it's initial use of the most obscure language,inventing phrases as they went along. The even had to publish a glossary of terms in order to avoid being mis-understood.. So far their sucessors the FCA have not been bad in this regard but confusing phrases can creep in .For example a recent reference to "Consumer credit space" ?. See what I mean ! .

    • Rob Chisholm, Applewood Vehicle Finance Ltd - 19/08/2014 09:46

      @Kel Prince - Bureaucratic speak ... and they expect everyone who lives in the real world to decipher it and understand what they mean. No wonder there is still non-compliance when few fully understand what it is they are supposed to be complying with. Fortunately I believe that the majority of us in the vehicle finance market already wish to be seen to be transparent in our offers and dealings, even though there will of course be the odd bad apple or two. There is still an issue between what the authorities demand and what the consumer actually wants ... information overload can be confusing in itself for the average buyer.