Consumer credit

There are a number of rules you may have to comply with if you advertise credit or hire arrangements. These rules cover all different mediums - such as print, radio, television, the internet, telephone canvassing and text messaging.

The rules are designed to make sure consumers get an accurate idea of the type of credit or hire on offer and its cost.

Key points on credit advertisements

All consumer credit advertisements must be easy for potential customers to understand - ie legible or clearly audible and in plain language. If an offer is dependent on security being provided, the nature of this must be specified.

If an advertisement includes an interest rate or any amount relating to the cost of the credit, a representative example of the offer must also be included. This includes when an advertisement refers to an offer of 0% credit.

The example needs to be representative of agreements which are expected to result from the advertisement and - in most cases - must include the following standard information:

• the rate of interest - rules on how this can be presented depend on the terms of the credit agreement
• any fees or charges included in the total charge for credit
• the total amount of credit - the sum available to the borrower, so excluding any financed charges
• a representative annual percentage rate (APR) - this must reflect at least 51% of the business expected to result from the advertisement
• the duration of the agreement - not required for open-end agreements
• the total amount payable - not required for open-end agreements
• the amount of each repayment of credit - not required for open-end agreements
• if relevant, the price plus any deposit required to pay cash for the goods or services instead

This standard information must be clear, concise and presented together. For example, with a print advertisement, the information could be grouped in a box and mustn't be scattered around the page.

Each item of standard information must be given equal prominence, while also being more prominent than any other details in the advertisement that relate to the cost of the credit.

For advice on how these rules apply to advertising via the internet, text message, radio or television - download consumer credit regulations guidance (PDF, 563K).

Remember that if your credit deal requires payment protection insurance, its cost must be reflected in the APR that you specify.

Restricted expressions

The regulations contain a list of expressions that cannot be included in a credit advertisement unless certain conditions are met. This includes the terms "interest-free" and "overdraft".

Advertisements subject to tighter rules

Additional rules for displaying a representative APR are likely to apply if your advertisement falls into one of the following categories:

• it's aimed at consumers with low credit ratings
• it makes comparisons with other credit deals or credit providers
• it offers any incentive to take out credit