Legal Article - Business Law

The Legal Requirements when a Motor Retailer, acting as a Credit Broker, Advertises Finance




The following guidance covers the general legal requirements when a Motor Retailer, acting as a credit broker or intermediary, advertises finance for motor vehicles on the internet or in literature eg papers, journals etc, on banners, on vehicles etc. 

It does not cover advertisements on the radio or TV since there are special clearing rules for such media advertising, although many of the rules will still apply. 

These guidelines relate to the Consumer Credit (Advertisements) Regulations 2010 and the COBS (Conduct of Business Sourcebook) requirement of the FCA for financial promotions.

1. All finance advertisements must...

All Motor Trade finance advertisements must...

  • include your Consumer Credit Licence name
  • not be misleading
  • be fair, clear, easily legible
  • use plain and intelligible language
  • not emphasise potential benefits without also giving a fair and prominent indication of relevant risks
  • be sufficient and presented with a view to the average recipient
  • not disguise, diminish or omit important information
  • disclose to the borrower limitations on independence and in particular exclusive use of one of more creditors
  • if applicable, state a guarantee may be required

2. If the finance advertisement indicates...

If the Motor Trade finance advertisement indicates...

a) finance is available to customers who might consider they would be otherwise restricted or

b) terms are more favourable, temporarily or generally, than in any other case or with another lender or

c) an incentive to apply for finance

The advertisement must, in addition, specify the ‘representative % APR’ (with greater prominence than the indications/incentives under a), b) or c) above).

3. If the finance advertisement includes...

If the finance advertisement includes...

a) a rate of interest (other than merely required under 2 above) or

b) an amount (absolute or percentage) relating to the cost of the finance

The advertisement must additionally include your postal address (unless as a banner on your premises) and a representative example comprising:

  • the words ‘representative example’
  • the representative APR
  • any other rate of interest
  • any other charges included in the total charge for credit
  • the amount of credit
  • cash price
  • advance payment/deposit
  • duration of the agreement
  • repayments
  • total amount payable

4. Prominence and presentation of information...

Prominence and presentation of information...

  • if paragraph 2 above applies the APR must be more prominent than any of the information under a), b) or c) in that paragraph
  • if paragraph 3, above, applies all of the specified information must be presented together and have equal prominence and greater prominence than any other information in 2 a), b) or c) or other information relating to the cost of credit

5. Representative APR...

Motor Trade Representative APR...

  • the representative APR must be shown as ‘% APR representative’ or ‘representative % APR’
  • the representative APR is defined as ‘an APR at or below which the advertiser reasonably expects, at the date on which the advertisement is published, that credit would be provided under at least 51% of the consumer credit agreements which will be entered into as a result of the advertisement'

6. Wording for customers potentially restricted on taking credit...

Wording for customers potentially restricted on taking credit...

  • 'Problems obtaining credit'
  • ‘CCJ/Arrears/Default’
  • ‘Poor credit history’
  • ‘Low credit rating’
  • ‘Turned down for credit’

7. Some examples of wording for more favourable terms...

Some examples of wording for more favourable terms...

  • ‘we’ve halved our usual rates’
  • ‘buy now and no deposit to pay until Christmas’
  • ‘forget a bank loan, we will beat it’

8. Some examples of wording of incentives...

Some examples of wording of incentives...

  • ‘we’ve lowered our finance rates through February’
  • ‘pay nothing for 1 year’
  • ‘free smart phone with finance deals in December’
  • 'our cars are cost price when taking finance in March’

Author: Dennis Chapman

Published: 15 Oct 2014

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