Credit advertising

The Consumer Credit Act 1974 lays down rules governing advertisements for consumer credit or credit brokerage.

Consumer Credit Directive

The Consumer Credit Act and regulations are changing as a result of implementation of the Consumer Credit Directive (CCD).  Regulations were laid on 30 March 2010 and are due to come into force on 1 February 2011. It will however be open to firms to comply before then if they choose. Details can be found on the Department for Business, Innovation and Skills (BIS) website.

Relevant OFT guidance will be updated in due course in the light of the CCD changes.

The relevant regulations are the Consumer Credit (Advertisements) Regulations 2004, as amended in 2004 and 2007 (the Regulations).

The Regulations are enforced by local authority trading standards services and by the OFT, using powers in Part 8 of the Enterprise Act 2002

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The Consumer Credit (Advertisements) Regulations

 The Regulations aim to ensure that credit advertisements give a clear and balanced view of the nature and costs of the credit on offer.

The Regulations extend to all forms of advertising, including in print (for example, newspapers, circular letters, flyers, catalogues or billboards), on television or radio, on the internet, on teletext or by way of telephone canvassing.

In particular, most credit advertisements must include a typical APR. This is a rate at or below which at least 66 per cent of agreements resulting from the advertisement are expected to be made. The typical APR is required if the advertisement includes:

• any interest rate or APR, or any figures relating to the cost of credit
• any indication that credit is available to persons who might consider their access to credit restricted
• any indication that the terms of the credit are more favourable than those available in other cases or from other creditors, or
• any incentive to apply for credit or to enter into an agreement under which credit is provided.

The typical APR must be more prominent than any trigger information, and any other financial information. In the case of advertisements in printed or electronic form, it must be at least 1.5 times the size of financial information including the price of goods offered in the advertisement.

Financial information must be presented together as a whole in the advertisement, and with equal prominence. All information must be easily legible. There are also rules restricting the inclusion of certain expressions, and requiring security statements.

The OFT has produced guidance on the Regulations together with sample advertisements and a flowchart illustrating the requirements.

Download Credit advertising (pdf 151 kb).

Download Sample advertisements and flow chart (pdf 1.4 mb).

In addition, we have produced detailed FAQs setting out our interpretation of key provisions of the Regulations and how we intend to enforce the rules.

Download Consumer Credit (Advertisements) Regulations FAQs (pdf 376 kb).

Download Online sponsored links - Joint FSA and OFT guide to advertisers of financial products and services (pdf  375kb)  

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Dually regulated advertisements

  Some advertisements for mortgages or other secured loans may be subject to dual regulation under the Consumer Credit (Advertisements) Regulations and the Financial Services and Markets Act. If so, they will need to comply with Financial Services Authority (FSA) rules as well as the Regulations.

The FSA and OFT have jointly produced guidance to help firms identify when an advertisement may be dually regulated and to address some of the common issues that firms may encounter when creating a fully compliant advertisement.

Download the joint FAQs (pdf 200kb) or view them on the FSA website.

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The Consumer Protection from Unfair Trading Regulations

In addition, credit advertisements are subject to the Consumer Protection from Unfair Trading Regulations (from 26 May 2008) - see the CPRs webpage.

The CPRs also apply to advertisements for consumer hire (which were previously subject to the Consumer Credit (Advertisements) Regulations).

The CPRs prohibit unfair commercial practices, including misleading actions or omissions. For example, if an advertisement contains false information or is likely to deceive consumers in relation to specified matters, or if it omits or hides material information or provides such information in a manner which is unclear, unintelligible, ambiguous or untimely.

The OFT and the Department for Business, Enterprise and Regulatory Reform (BERR) have jointly produced guidance on the CPRs. See Consumer Protection from Unfair Trading Regulations.

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