Newsroom

OFT accepts undertakings from loans company

140/06    29 September 2006

The Personal Loan Phone Ltd has agreed to change its credit advertising following action by the OFT as part of its continuing monitoring of newspaper credit advertisements.

The credit advertisement for the loans company, which appeared in three national newspapers earlier this year, was found to be in breach of the Consumer Credit (Advertisements) Regulations (CCARs). The CCARs are designed to ensure that advertising is truthful, transparent and provides the consumer with a balanced picture of the product. The advert failed:

• to give the typical APR greater prominence than the statement 'FAST UNSECURED LOANS', which is an incentive for the consumer to apply for credit
• to give equal prominence to all financial information relating to the credit, its costs and repayment
• to display the number and frequency of repayments.

The company voluntarily withdrew its advertising after being contacted by the OFT and has given undertakings under the Enterprise Act that it will not breach the CCARs in the future.

Ray Hall, Director of Consumer Credit and Enforcement at the OFT said:

'The regulations governing credit advertisements are designed to ensure that consumers receive essential information about the true cost of loans on offer. It is important that businesses comply with these requirements when drawing up their advertising. If in doubt they should seek advice.'

NOTES

1. The Consumer Credit (Advertisements) Regulations 2004 control the provision of 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.

2. The typical APR provides a yardstick for measuring the 'cost' of credit under different types of agreement. Potential borrowers are then able to compare the relative cost of credit from different sources. The typical APR must in all circumstances have greater prominence than any other rate of charge.

3.The company address is: The Personal Loan Phone Ltd, 16 Glategny Esplanade, St. Peter Port, Guernsey, Channel Islands, GY1 1WN.

Back to:2006