City watchdog cracks down on ads that downplay borrowing risk as cost of living crisis rages
The UK’s financial watchdog has told lenders and brokers to stop using misleading terms in their advertising that could make borrowing money easier or less risky than it is.
The Financial Conduct Authority (FCA) has sent letters to 28,000 consumer finance companies telling them to stop using terms such as “no credit check loans”, “pre-approved” or “secured loan”, as the watchdog has warned businesses not to involve customers will automatically get a loan if they apply.
The city regulator said it issued the warnings as the UK’s cost of living crisis will force more people to seek loans.
The FCA said misleading marketing materials that do not warn customers of the consequences of taking out a loan increase the risk that consumers will find themselves in worse financial trouble.
The watchdog said it would continue to monitor online credit advertising, as it said it would take action – including banning certain ads and forcing companies to remove misleading marketing materials – if companies do not comply.
Sheldon Mills, executive director of consumer and competition at the FCA, said: “The rising cost of living means many more consumers could find themselves in trouble.”
“When people are looking for a loan, it’s essential that they have a full picture of what it could mean and the risks involved, especially if they are already in dire financial straits.”
“There is no excuse for advertisements to make borrowing easier or less risky than it is and they should seek to help customers through the cost of living crisis – not ‘exploit in their marketing.’