Credit firms should not be exploiting cost-of-living crisis in marketing, says FCA

CONSUMER credit companies have been told by the City regulator they have a responsibility to ensure they do not exploit the cost-of-living crisis to promote their services.

The Financial Conduct Authority (FCA) said it had seen financial promotions including phrases such as “no credit checks” and “loan guaranteed”.

It said there is no excuse for adverts making borrowing look less risky or easier than it is. Lenders and brokers who do not stop using misleading terms in their advertising face regulatory action.

More people may be inclined to take out loans amid the living costs crisis.

But the FCA said marketing that does not give clear information and warnings about the potential consequences of borrowing puts consumers at risk of finding themselves in a worse financial position.

It has written to nearly 28,000 consumer credit companies.

Firms’ adverts should not give consumers the impression 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 regulator said.

The letter says: “Millions of people are facing the biggest cost-of-living crisis in more than a decade, with bills expected to rise considerably.

“We can expect to see greater demand for credit, including short-term credit, particularly impacting consumers in vulnerable circumstances.

“We need to keep the sector under close review to ensure demand does not result in unsustainable and often unaffordable lending.

“Firms have a responsibility to ensure they do not exploit the cost-of-living crisis to promote their services.

“Firms should focus on their customers’ needs, delivering the right information, at the right time, and in accordance with our rules.”

The FCA said it will continue to monitor online credit advertising to check companies are complying.