Clear, fair and not misleading

This is the standard required of consumer credit advertising. On 1 April 2014 the Financial Conduct Authority (the "FCA") became responsible for supervising businesses that provide credit to consumers. Since then, the FCA has examined 554 adverts offering credit to consumers and found that 108 did not meet the required standard. The main offenders were payday lending companies; however, there were also a number of failings in the motor and retail finance sector.

Adverts referring to a monthly repayment with no information as to whether the payments were for rental or purchase of a product were top of the hit list in this sector. The FCA is also keen to target advertisers making exaggerated claims that their offers apply to, for example, "all new cars" when, in fact, the offers are qualified in such a way that they only apply to a select limited number.

Many Regulations which applied to this area of advertising prior to 1 April 2014 have been repealed; however, the general principles are incorporated into the FCA's rules. Terms such as "interest free" and "no deposit" can still only be used in advertising if certain criteria are met.

Breaches of the rules that apply to advertising can not only lead to investigation by the FCA, but also the scrutiny of other relevant enforcement bodies such as the Advertising Standards Authority and Trading Standards. If sufficient evidence cannot be provided to support the claims made in an advert, the advertiser can be prosecuted and, if found guilty, be fined £1,000s and have a conviction on its record.

The FCA's conclusion after its initial examination of this area of advertising is that "consumer credit firms must raise advertising standards". It is therefore now more important than ever to ensure that adverts are clear, fair and not misleading.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.