The Financial Conduct Authority (FCA) is taking a closer view at the way motor dealers (acting as credit brokers) advertise finance.
There has always been the Advertising Standards Authority rules on advertising being clear, fair and not misleading, and, of course, the Consumer Credit Advertisement Regulations. The FCA has now carried out a review of financial promotions and this will not be the last.
FCA claim the key issues that financial advertisements should avoid are
- Lack of balance through
- misleading headline claims
- small print
- insufficient prominence to key risks
- Lack of clarity through
- insufficient information
- unfair/unrealistic impression of the product
- Being misleading to the customer
- overly prominent/cherry picked data on past performance
- creating unrealistic expectations
- making misleading savings claims
One particular aspect that is very difficult to interpret is the requirement that, with any potential benefits of the product there has to be a fair and prominent indication of relevant risks (FCA Guidance CONC 3.3.5). So for instances of the advertisement, if running 0% APR or a low repayment figure, what are the relevant risks? We have yet to see clearer guidance from FCA on this.
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