City watchdog to crackdown on adverts that downplay risk of borrowing as cost-of-living crisis bites
The UK’s financial watchdog has told lenders and brokers to stop using misleading terms in their advertising that might make borrowing money look easier or less risky than it is.
The Financial Conduct Authority (FCA) has sent letters to 28,000 consumer credit firms telling them to stop using terms such as “no credit check loans,” “pre-approved,” or “loan guaranteed,” as the watchdog warned firms not to imply customers will automatically get a loan if they apply.
The City regulator said it had issued the warnings amid concerns the UK’s cost-of-living crisis will force more people to seek out loans.
The FCA said misleading marketing materials that fail to warn customers about the consequences of taking out a loan raise the risk that consumers are put in a worse financial position.
The watchdog said it will continue to monitor online credit advertising, as it said it will take action – including by banning certain adverts and forcing firms to take down misleading marketing materials – if companies fail to comply.
Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said: “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.”