Credit firms must raise advertising standards says watchdog
Consumer credit providers must do more to make sure adverts do not mislead, says the Financial Conduct Authority (FCA) as it finds one in five falls short of standards.
Rules state that adverts must be clear, fair and not misleading for consumers.
The FCA took over responsibility for the sector in April. It looked at more than 500 adverts for a range of consumer credit products.
A number of these, including payday loan products, lacked key information.
The FCA found examples where consumers were encouraged to hit the "apply" button for a product before having a chance to access important information, a tactic which is against its rules.
The FCA said, though, that most firms were quick to make changes once the shortcomings were pointed out.
Clive Adamson, director of supervision at the FCA, said: "It is particularly important in this sector that advertisements for financial products enable customers to make informed decisions. We think that more can be done to ensure that advertisements are fair, clear and not misleading.
"Firms have responded well when challenged about ads which have not met the standards. We will continue to work with firms and monitor their performance in this area to ensure the high standards we are looking for are met."
Other examples which did not meet the regulations included:
- targeting young audiences with promotions for products that consumers must be over the age of 18 to use, such as distributing branded colouring-in sheets with their pamphlets for high-cost, short-term loans,
- claiming that their product would help repair credit ratings,
- claiming a product will clear a customer's debt, when in fact it is just substituting one debt for another.
In total, 108 promotions were identified as not meeting the rules with examples of poor advertising across all mediums including print, online, in-store and direct mail. Of the 108, 75 firms have responded, all of whom have amended or withdrawn multiple promotions.
The remaining firms are in the process of responding.