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Credit advertising sweep shows over 60 per cent not complying with rules

New guidance published

181/05    28 September 2005

Over 60 per cent of advertisements in regional newspapers, and 68 per cent in popular car magazines, failed fully to comply with new advertising regulations, according to an OFT co-ordinated review carried out by trading standards services across the UK. The findings were revealed today as updated guidance explaining the credit advertising rules was published.

Download Credit advertising (pdf 151 kb).
Download FAQs (pdf 438 kb).

The nationwide review of regional papers and car magazines, carried out by Trading Standards Services and the OFT, found a poor rate of compliance with the Consumer Credit (Advertisements) Regulations, which came into force on 31 October 2004. Most breaches of the regulations concerned the way in which typical APRs were depicted in advertisements, including:

• no typical APR being shown, where this is required by law
• displaying more than one typical APR in an advertisement – as many as six were displayed in one advert
• the typical APR not being given the required prominence
• the typical APR not being shown together with information on payments and charges.

Sir John Vickers, OFT Chairman, said:

'The findings of our sweep are most unsatisfactory for consumers, who must have clear information on the costs of loans. The OFT and trading standards services are working with business to drive up compliance, and will take enforcement action where necessary'.

The OFT and local trading standards services have, in the light of the sweep's findings, provided targeted advice and support to businesses in order to achieve compliance. Further action will be taken where there is evidence of continued non-compliance.  Where necessary, court action will be considered.

The OFT also published updated guidance to businesses today. The answers to Frequently Asked Questions, first published last October and updated in the light of market developments, provide detailed advice on how to comply with the credit advertising rules. The accompanying booklet 'Credit advertising' provides a simple summary of the regulations. OFT will keep this guidance under review so it can respond swiftly to new issues as they arise.

NOTES

1. The OFT announced its intention to conduct a review in June 2004. See press release 99/04 for further details. The OFT and Trading Standards undertook the review between November 2004 and February 2005.

2. Under the 2004 Regulations the OFT has to date dealt with 28 cases achieving compliance through advice or warning letters.

3. In October 2004 the OFT published guidance on the Regulations in the form of answers to frequently asked questions (FAQs). The FAQs comprehensively detail OFT's interpretation of the regulations. They were produced following consultation with stakeholders including trade bodies and trading standards via LACORS.

4. The OFT consulted on a draft update to the FAQs in March 2005 and on a draft of the 'Credit advertising' booklet in April 2005. Comments from stakeholders have been taken into account.

5. The FAQs and 'Credit advertising' are available from the Consumer Credit Act area of the site.

6. Consumer credit or hire advertisements must comply with section 46 of the Consumer Credit Act 1974 and the Consumer Credit (Advertisements) Regulations 2004. The Regulations apply to advertising in all its forms whether on television, radio, video, electronically or in print, and cover the amount and type of information and the way it is presented. OFCOM is the regulator for television and radio advertising.

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