The Financial Conduct Authority (FCA) have published numerous articles in the past stating advertisements should be clear, fair and not misleading. More recently though they have released a warning to Lenders and Brokers to stop using misleading terms in their advertising or face regulatory action.
The statement they produced is aimed at those promoting credit, of which they wrote to almost 28,000 consumer credit firms warning them not to use terms such as ‘no credit check loans’, ‘loan guaranteed’, ‘pre-approved’ or ‘no credit checks’. However, if you produce an advertisement promoting any other type of credit facility such as to pay for an insurance plan, mortgage or equity release product then it is worth taking note of the points they raised.
Financial Promotion Tips
Due to the rising cost of living the FCA have set out their plans to protect and support consumers in consumer credit markets. They also have a three-year strategy including a focus on driving up standards and making firms put consumers’ needs first. As part of the Consumer Duty, coming into force from July 2023, they promote that communications, including financial promotions, must be clear so consumers can understand both the benefits and risks of a product.
- If you produce an advert promoting any type of lending, there are some key points you should consider:
- The borrowing shouldn’t be made to look easier or less risky than it is;
- Nor, should it seek to exploit customers who are seeking help through the cost of the living crisis;
- The article should provide a balanced picture of the borrowing, including both features and risks associated in equal prominence;
- The FCA also expect firms not to 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.
The FCA is continuing to monitor online advertising and if a firm fails to comply, the FCA have announced that they will take action. This could lead to banning adverts or requiring firms to change or withdraw them. Or, even worse, they could remove a firm’s permissions to engage in regulated credit activities.
We review lots of financial promotions every year. We not only review them with our compliance hat on, but also as a customer. Because of our knowledge of the industry this can be tricky as we can often see what a firm is trying to say. However, we always consider how a consumer, who has little knowledge of the financial services market, would read it. Where we come across scenarios where the message isn’t clear, we always try to provide guidance and suggested text so that the firm can tweak the article.
So when producing a promotion, consider what message you are trying to make. Is the promotion balanced, i.e. it says the benefits and the risks. Avoid exploiting someone’s vulnerability (even where this is not the intention). Also if you’re in the mortgage or equity release market, ensure you include the usual risk warnings and they are prominently displayed.
Finally, remember; each article must be compliant in its own right. Including a link to another page in your website, would fail to meet this requirement as not all consumers will click on a link to read the T&C’s.
Compliance Check
Please remember to send all Advertising and Financial Promotions to compliance@connectmortgages.co.uk for approval, before being made available in the public domain.
Regards
Liz Syms, CEO