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OFT accepts undertakings to stop illegal loan adverts

157/06    10 November 2006

Loans company Charles Price Ltd has agreed to change its credit advertising following action by the OFT.
 
A credit advert for the Cheshire based company, which appeared in a national newspaper earlier this year, was found to be in breach of the Consumer Credit (Advertisement) 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 offered loans of up to £75,000 secured against customers' homes.

The advert failed:

• to give the typical APR greater prominence than the statements  'QUICK LOANS NO FEES', which is an incentive for the consumer to apply for credit
• to give the typical APR greater prominence than the statement 'bad credit history' which indicates that credit is available to consumers who might otherwise consider their access restricted
• to provide the required warning for advertisements where the security comprises of a mortgage or charge on the debtors' home
• to provide the required security warning for advertisements where credit is available for the payment of debts due to other creditors.

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.

Simon Priddis, Senior Director of Markets and Projects at the OFT, said:

'Markets work well for consumers when full and accurate information is available, allowing them to choose the right product or service for them. 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.'

The OFT continues to monitor newspaper advertising to ensure that credit advertisements are not misleading.

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. For more information, visit the credit advertising area of this website.

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 and all other relevant triggers.

3. The company address is: Charles Price Limited, 8A Vicarage Lane, Bowden Vale, Altrincham, Cheshire, WA14 3BD.

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