The Financial Conduct Authority has revealed that over 20% of advertisements it analysed, as part of an industry investigation, breached standards and has potentially mislead customers.
Following an investigation into 500 adverts, across all mediums including print, online, in-store and direct mail, the watchdog ruled that 108 of these promotions did not meet industry standards and rules
"It is particularly important in this sector that advertisements for financial products enable customers to make informed decisions. We think that more can be done to ensure that advertisements are fair, clear and not misleading," said Clive Adamson, director of supervision at the FCA.
"Firms have responded well when challenged about ads which have not met the standards. We will continue to work with firms and monitor their performance in this area to ensure the high standards we are looking for are met'."
While the FCA urged credit firms need to do more to ensure their adverts and promotions do not mislead potential customers, it said that most firms were quick to make changes once the shortcomings were pointed out.
The FCA found examples where consumers were encouraged to hit the 'apply' button for a product before having a chance to access important information, a tactic which is against its rules.
"Of the 108, 75 firms have responded, all of whom have amended or withdrawn multiple promotions. The remaining firms are in the process of responding," said the FCA statement.
"The FCA will continue to monitor these promotions and will be working with firms to help them comply with the rules and improve standards to the benefit of consumers. The FCA also acts on complaints received from the public and via the Advertising Standards Authority."
Examples of Adverts Not Meeting Regulations
• Targeting young audiences with promotions for products that consumers must be over the age of 18 to use, such as distributing branded colouring-in sheets with their pamphlets for high-cost, short-term loans
• Claiming that their product would help repair credit ratings
• Claiming a product will clear a customer's debt, when in fact it is just substituting one debt for another