FCA warns consumer credit firms about misleading ads
The City regulator has warned consumer credit firms to stop using misleading terms in their advertising after the cost-of-living crisis means more people may take out loans.
The Financial Conduct Authority (FCA) wrote to nearly 28,000 consumer credit lenders and brokers warning them not to use terms such as “no credit check loans”, “loan guaranteed”, “pre-approved” or “no credit checks” when marketing loans and said if they do not comply it will take regulatory action.
The regulator said firms’ adverts should not give consumers the impression that they will automatically get a loan if they apply, or that they can get a loan without the lender checking they can afford it.
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The watchdog said marketing that does not give clear information and warnings about the potential consequences of borrowing puts consumers at risk of finding themselves in a worse financial position.
Going forward, the FCA said it will continue to monitor online credit advertising to check that firms are complying.
And if they do not, the regulator will take action which could include banning adverts, telling firms to change or withdraw them, or even removing a firm’s permissions to engage in regulated credit activity.
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“The rising cost of living means many more consumers may find themselves in difficulty,” said Sheldon Mills, executive director of consumers and competition at the FCA.
“When people are looking for a loan, it’s vital that they have the full picture about what this might mean, and the risks involved – particularly if they are already in a difficult financial situation.
“There is no excuse for adverts to make borrowing look easier or less risky than it is and they should be seeking to help customers through the cost of living crisis – not exploiting it in their marketing.”