Financial promotions play a big role in informing customers about their options and encouraging purchases. But with that influence comes responsibility.
The Financial Conduct Authority (FCA) closely regulates financial promotions to ensure they’re clear, fair, and not misleading, especially when it comes to regulated products like vehicle finance. If you’re a dealer promoting finance, it’s essential to understand what good (and bad) looks like.
What is a financial promotion?
A financial promotion is any communication that invites or induces a customer to engage in a financial activity, such as taking out a car loan or finance agreement. This includes advertisements on your website, social media posts, printed brochures, in-showroom displays, or even verbal discussions.
It’s your responsibility as a dealership for ensuring your promotions meet FCA standards.
Key information every promotion should include
To ensure clarity and fairness, all financial promotions must include certain key details. These help customers make informed decisions and avoid confusion later down the line:
- Representative example: If you mention a specific monthly payment or interest rate, you must also include a representative example. This should show the total cost of credit and must be representative of the agreements you actually offer.
- APR (Annual Percentage Rate): The representative APR gives customers a clear picture of the total cost of borrowing. It must be shown clearly and be no less prominent than any other rate or figure mentioned.
- Lender and status disclosure: Make it clear who the lender is and your relationship to them.
- Eligibility warnings: Include phrases like "subject to status" or "terms and conditions apply" to manage expectations and stay compliant.
- Risk warnings: where relevant, ensure customers understand the risks involved, such as the possibility of repossession if payments are not made.
What good looks like
Best practice in financial promotions is all about transparency and putting the customer first. Here’s what good looks like:
- Clear and jargon-free language: Avoid overly technical terms and explain finance products in plain English.
- Balanced information: Present both benefits and limitations of the product fairly, don’t just focus on low monthly payments.
- Upfront costs clearly stated: Be honest about deposits, balloon payments, and any fees.
- Prominent display of key information: Make sure APRs, total payable amounts, and representative examples are easy to find, not hidden in the small print.
What to watch out for
It’s equally important to avoid common pitfalls. Here are a few red flags to be wary of:
- Misleading “from” prices or monthly payments that aren’t truly representative of what most customers will get.
- Selective quoting of interest rates or payment terms to make the offer look better than it is.
- Omitting key details, like the total amount payable or who the finance provider is.
- Tiny T&Cs: If essential terms are buried in small print or hard to read, your promotion could fall foul of FCA rules.
Social media and digital promotions
Digital marketing offers powerful reach, but it also comes with added scrutiny. Promotions on social media must meet the same standards as traditional adverts. Use clear visuals, avoid abbreviations that might confuse consumers, and always link to the full terms or a representative example where necessary.
Stay up to date
FCA rules can evolve, so it’s important to stay informed. Regular training for staff, reviewing your current promotions, and working closely with your finance partners, like MotoNovo, can help ensure you’re always on the right track.
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