Dial4aloan withdraws credit adverts

202/04 8 December 2004

Dial4aloan Ltd has withdrawn credit advertisements following an approach by the OFT and has put procedures in place to ensure future compliance with the rules.

During a sweep of Scottish national newspapers the OFT found credit advertisements from Dial4aloan targeting homeowners. The OFT considered these and subsequent advertisements to be misleading under the Consumer Credit Act (see note 2). The OFT considered the following aspects appearing in some or all of the advertisements to be misleading:

the prominent depiction of a repayment example that was not accompanied by an indication of the duration of the repayments to be made
the placing of a 'from APR' in such close proximity to the repayment example that it gave the misleading impression that it was the APR for that example when in fact it was not
including the required credit advertising information in such a way that it gave the reader the misleading impression that it was not part of that credit advertisement.

The OFT took the view that the advertisements also breached the Consumer Credit (Advertisement) Regulations 1989, as:

the APR of 8.4 per cent was not shown as being a representative APR nor was it more prominent than the 6.9 per cent 'from APR'
the wealth warning was not prominent enough, only appearing in the small print
the postal address of the advertiser was not given.

Dial4aloan promptly withdrew its advertising following the OFT's request. Following discussions with the OFT, Dial4aloan has set out clearly the steps that it will take in future to ensure that future advertisements do not breach the relevant Regulations, including the new Consumer Credit (Advertisements) Regulations 2004 (see note 3).

John Vickers, OFT Chairman, said: 'Consumers have a right to fair and accurate credit information when considering taking out a loan. Credit providers have a legal obligation to make sure their credit advertisements are not misleading.'

NOTES

1. Dial4aloan Ltd is a wholly owned subsidiary of Cattle plc.

2. Section 46 of the Consumer Credit Act 1974 controls misleading credit advertisements.

3. On 31 October 2004 the Consumer Credit (Advertisements) Regulations 1989 was replaced by the Consumer Credit (Advertisements) Regulations 2004. The Consumer Credit (Advertisements) Regulations 2004 control credit or hire facilities to consumers. The aim of the regulations is to ensure that customers receive a true picture of the nature and cost of credit terms being offered. The regulations apply to all forms of advertising where credit is available. The issues raised in this case which breached the 1989 Regulations are also covered by the 2004 Regulations.

4. The APR provides a yardstick for measuring the 'cost' of credit under different types of agreement. Potential borrowers are able to compare the relative cost of credit from different sources. The APR must in all circumstances have greater prominence than any other rate of charge. There is also a requirement that warning notices are featured no less prominently than any other credit information, except the APR.

5. The company address is: Dial4aloan Ltd, Kingston House, Centre 27 Business Park, Birstall, Batley, West Yorkshire WF17 9FD.

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