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Dear CEO | Release Date: 6th May 2022

To read a longer summary of this Dear CEO letter, click here.

To access the original FCA document, click here.

Short Summary

In a recent directive from the Financial Conduct Authority (FCA), CEOs of credit brokerage and high-cost lending firms are reminded of their obligations to ensure all financial promotions are clear, fair, and not misleading, as specified in CONC 3 of the FCA Handbook. The letter emphasises the importance of these standards amidst the current cost of living crisis, which has increased demand for credit, particularly among vulnerable consumers.

The FCA has raised concerns about promotions that suggest credit is available without adequate checks or is guaranteed. Such claims could mislead consumers about their eligibility and the loan’s terms, violating the requirement for promotions to be clear and fair. Issues noted include the absence of risk warnings and Representative APR (RAPR) in promotions, misleading consumers about potential debts and costs.

Furthermore, some firms have not adequately disclosed whether they are acting as brokers rather than lenders, which could confuse consumers about who is providing the credit. The FCA warns that non-compliance will lead to enforcement actions, including the withdrawal of misleading advertisements.

Key Take-aways:

Firms must rigorously review their promotional materials to ensure they align with FCA standards, providing transparency and safeguarding consumer interests. This involves accurate disclosures about their role as lenders or brokers, inclusion of all necessary warnings and cost indicators, and adherence to legal and regulatory frameworks to prevent misleading promotions.

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