Category: Advertising Standards Authority

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FCA publishes finalised guidance on financial promotions on social media

Earlier today, on 26 March 2024, the UK Financial Conduct Authority published a press release and finalised guidance on financial promotions on social media.

There’s much in the guidance but some headline points for now are:

– The FCA has repeated its guidance that it expects financial promotions to be standalone compliant. While promotions of complex financial products “might require additional supporting information or disclosure“, the “initial promotion needs to remain compliant in and of itself“.

– The requirement for prominence in the FCA’s handbooks is “media-neutral“. Firms should consider the existence guidance on prominence. Firms should ensure information which is required to be displayed prominently “is displayed without needing click-through or any other optional action to view it“.

– Social media may not always be appropriate to promote financial products.

– There are some examples of how an unregulated BNPL financial promotion could be published.

– Firms are reminded of the consumer duty and how it could apply to social media.

– There is a real focus on influencers (or finfluencers).

– There’s guidance for firms on what ‘in the course of a business‘ means. The FCA makes it clear that this includes any level of commerciality. There are also some examples in paragraphs 4.20 to 4.27.

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Financial Conduct Authority warns businesses to stop misleading credit adverts

On 6 May 2022, the UK Financial Conduct Authority published a press release and a ‘Dear CEO’ letter to consumer credit firms telling them to stop using misleading terms in their advertising.

The FCA has written to almost 28,000 consumer credit firms “warning them not to use terms such as ‘no credit check loans’, ‘loan guaranteed’, ‘pre-approved’ or ‘no credit checks’ when marketing loans”. The FCA’s concern is that firms are giving consumers a misleading impression that they will automatically get a loan.

The FCA’s ’Dear CEO’ letter says:

– it expects authorised firms who are issuing and/or approving consumer credit financial promotions to “ensure that all communications of financial promotions are clear, fair and not misleading and otherwise comply with the rules set out at CONC 3. This includes ensuring that those to whom a financial promotion is addressed, or at whom it is directed, understand the nature of the firm’s regulated activities”;

– it has identified a number of financial promotions including phrases like “‘no credit checks loans’, ’loan guaranteed’, ‘pre-approved’ or ’no credit checks’” (some of which could lead consumers to believe that there are no credit checks);

– some firms promoting high-cost short-term credit have failed to include the late payment warning under CONC 3.4.1R;

– whilst the FCA is aware that some advertising media “might appear to pose challenges for firms in meeting” the FCA’s requirements, those rules are “media neutral” and the FCA considers it possible to comply (but it is relaxed on some minor changes to the warning for platforms which do not accept logos);

– some promotions have failed to include a representative APR; and

– certain promotions by credit brokers fail to state they are brokers and not lenders (as required by CONC 3.7.7R).

The FCA also reminds firms of the requirement to comply with the codes published by the Advertising Standards Authority.

Whilst the FCA says the ’Dear CEO’ letter applies to credit brokers and firms providing high-cost lending products, it has clear read-across to other consumer credit products.

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Advertising Standards Authority publishes replacement ruling that credit financial promotion was irresponsible

On 11 May 2022, the Advertising Standards Authority published a replacement ruling deciding that a radio advertisement for the online shopping provider Very was irresponsible.

The radio advertisement “featured a woman who stated, “My Bella is logo mad. I tell you what, she’d rather go to school in her socks than in trainers that aren’t Adidas or Nike. But, I wanted to treat her, so I went to Very and got all the stuff she wanted, and I was able to spread the cost. This was a really big year for Bella, and I want her to smash it …”, followed by a voice-over that stated, “With Very Pay, you have a choice of ways to pay for this very big school moment. Life is this very moment””.

The Advertising Standards Authority decided that the advertisement “pressure on parents to purchase branded shoes or other expensive designer items, on the basis they could play a significant role in their child’s success at school” and that “branded shoes, in and of themselves, were not a necessity in the same way that school shoes were more generally”. It also decided that the advertisement’s “messaging explicitly connected the use of a form of credit to buying more expensive goods, such as branded goods, and played on the anxieties parents might feel about their children starting or returning to school”.

The Advertising Standards Authority therefore concluded that the advert breached BCAP Code Rule 1.2 (on responsible advertising) because it “irresponsibly encouraged the use of credit to finance spending on expensive branded goods”.