FCA warns businesses to stop miselading credit adverts to protect consumers

The Financial Conduct Authority (FCA) has warned almost 28,000 consumer credit firms that their promotional activity risks breaching financial promotion regulation.

In a press release, published on May 6th, the FCA announced that letters had been sent to CEOs at almost 28,000 firms by Sheldon Mills, Executive Director of Consumers and Competition at the FCA, headed; Action needed to ensure your financial promotions are clear, fair and not misleading.

The letter warned the firms not to use terms such as “no credit check loans”, “loan guaranteed”, “pre-approved” or “no credit checks” when marketing loans. The letter also included some highly prescriptive points on promotional activity that should have all firms reviewing their financial promotional activity as follows;

• “Some promotions fail to include the Representative APR (RAPR)
• We have identified promotions by credit brokers which fail to state that they are brokers and not lenders as required
• If you have issued or approved any financial promotions (for unauthorised firms under S.21 FSMA) which are currently in use, please ensure you are satisfied that they comply with our relevant financial promotions requirements in CONC 3.
• You should consider conducting a review of your processes and systems and controls for financial promotions, to determine whether they are sufficiently robust in order to comply with CONC 3. This includes oversight of your appointed representatives/introducer appointed representatives and marketing across all media platforms such as: websites, paid for Google ads and social media sites such as TikTok and Instagram. We recommend a record of this review is retained.
• Finally, we ask that you draw this letter to the attention of your Board. We expect the Board to have considered the issues we have raised and to have approved the action taken in response and retain evidence that this action has taken place, including the outcomes of any subsequent actions.”

CONC 3 refers to Chapter 3 of the FCA Consumer Credit sourcebook and provide the regulatory requirements for financial promotions and communications with customers and can be accessed here.

The press releases concluded by noting that the FCA will continue to monitor online credit advertising to check that firms are complying. If firms fail to comply, the FCA will take action which could include banning adverts or requiring firms to change or withdraw them – or even removing a firm’s permissions to engage in regulated credit activity.

We urge you to review all financial promotional activity.