The UK Financial Conduct Authority (FCA) has distributed a Dear CEO letter to firms pitching credit in relation to their potentially misleading advertising.
The FCA states that it has issued 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” when marketing loans.
If these firms do not adhere to the request, they may face regulatory action.
Sheldon Mills, Executive Director of Consumers and Competition at the FCA, issued the following statement:
“The rising cost of living means many more consumers may find themselves in difficulty. When people are looking for a loan, it’s vital that they have the full picture about what this might mean and the risks involved – particularly if they are already in a difficult financial situation. There is no excuse for adverts to make borrowing look easier or less risky than it is and they should be seeking to help customers through the cost of living crisis – not exploiting it in their marketing. Firms’ adverts should not 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.”
In the letter, Mills told recipients they expect credit providers or brokers to puth their customers’ interests at heart and they will be proactively monitoring the market to assess compliance.
