Credit & Lending
Advertisers offering products and services on credit must prove that they hold a credit licence. The Consumer Credit (Advertisements) Regulations 2010 (CCARs), and FCA’s Consumer Credit Sourcebook (CONC) 3.5 apply .
Radiocentre has recently put together advice that has been confirmed by the FCA with a view to reducing unnecessary legals in credit ads. This can be found here.
Radiocentre guidance under the CCARs is as follows:
Where the ad includes a rate of interest or any amount relating to the cost of credit (whether a sum of money or a proportion of a specified amount), the ad needs “a representative example”.
A “Representative Example” consists of the following minimum information:
- the words “Representative Example”
- the fixed/variable rate of interest (e.g. “interest X% fixed/variable”)
- total amount of credit
- an APR, worded thus: “Representative X% APR” (the APR available on 51%+ of deals arising from the advertisement)
- cash price
- amount of any advanced payments and any other fees (if relevant)
- duration of the agreement
- total amount payable
- amount of each repayment of credit (if relevant)
The qualification “Representative X% APR” can be used without the full Representative Example only where the ad doesn’t specify a rate of interest or any amount relating to the cost of credit and includes one of the following:
- an ‘incentive’ to take out credit (e.g. “nothing to pay for a year”, “get cash fast”, “2% off our usual rates”);
- a ‘comparative indication’ (e.g.“low cost loans”, “our lowest rates”, “save money”, “low monthly payments”);
- a reference to poor credit rating (e.g. “can’t get credit?”).
Because of various ambiguities over the interpretation of the Consumer Credit Advertisements Regulations and to help protect advertisers, Radiocentre will advises that the phrase “Representative X% APR” (but not a representative example) goes in ads which include any reference to a deposit.
The Representative APR is the amount that 51% or more of respondents will expect to pay. Where two distinct offers are made, two distinct Representative APRs must be included.
Zero percent / Interest Free Credit
It is not a requirement in a 0% finance ad to state “o% representative APR”. Wording such as “interest free” is acceptable instead.
Where an ad for 0% finance quotes a monthly amount, a Representative Example is not triggered, but the ad needs to make clear the full cost of the product or service, e.g. by giving the deposit amount, length of the agreement and any final payment.
Personal Contract Purchase
Personal Contract Purchase (PCP) offers are essentially the same as any other offer of credit, and carry the same requirements.
Pay Day Loans
Pay day and other short-term high-interest loans must, where the APR is 100% or greater, carry the following wealth warning: “Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk” Interest rates must be given in a way that is clear to listeners, i.e. “one two five seven” for 1,257%, not “twelve fifty-seven” which may mislead the listener into believing the RAPR is 12.57%.
Trivial Loans
Taking out credit is a serious undertaking and should be treated accordingly. Care must be taken in the creative to ensure that it does not trivialise the taking out of a loan.
All credit information in radio advertisements must be clearly audible.