The Financial Conduct Authority (FCA) has told lenders and brokers they could face regulatory action if they don’t stop using misleading terms in their credit ads.
The regulator warned that the cost-of-living crisis means that more people could take out loans and marketing that does not give clear warnings about the potential consequences of borrowing “puts consumers at risk”.
“The rising cost of living means many more consumers may find themselves in difficulty,” said Sheldon Mills, executive director of consumers and competition, at the FCA. “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.”
The authority has written to around 28,000 consumer credit firms and warned them to not use terms like “no credit check loans”, “loan guaranteed”, “pre-approved” or “no credit checks” when marketing loans.
It told them that their 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.
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