Advertisements offering consumer credit deals

• Does the Consumer Credit Act 1974 ("CCA") apply to all advertisements offering credit deals?
• How do the 1989 Consumer Credit Advertisements Regulations work?
• Do any rules apply to all three of the "simple", "intermediate" and "full" credit ad. categories?
• What are the do's and don'ts of a "simple" credit advertisement?
• What are the do's and don'ts of an "intermediate" credit advertisement?
• What are the do's and don'ts of a "full" credit advertisement?
• Didn't I hear that the 1989 Regulations were due to be scrapped?
• What is the penalty for getting it wrong?

Does the Consumer Credit Act 1974 ("CCA") apply to all advertisements offering credit deals?

No. Section 46(1) of the 1974 Consumer Credit Act (which provides that credit advertisements must not be false or misleading in any material respect) and the Consumer Credit (Advertisements) Regulations 1989 do not apply to an advertisement which either expressly or by implication indicates clearly that a person is willing to provide credit for the purposes of a person's business and does not indicate (expressly or by implication) that a person is willing to provide credit otherwise than for the purposes of such a business. In other words if the credit advertiser wants to avoid the rules affecting consumer credit advertising, it must ensure that the advertisement refers exclusively to credit deals available to businesses.

How do the 1989 Consumer Credit Advertisements Regulations work?
The regime is a very strict one. Only three types of consumer credit advertisement are allowed: simple, intermediate and full. In each category certain information must be given and certain information is optional. Any consumer credit advertisement that fails to fall into any of the three categories will, regardless of the intention of the advertiser, be illegal. What's more, even if it succeeds in coming within one of the three categories, it might still be illegal if it is misleading.

Do any rules apply to all three of the "simple", "intermediate" and "full" credit ad. categories?
Yes, apart from the "non-misleading" requirement, all advertisements must be clear and legible and, except for the name, address and telephone number of the advertiser offering credit, the information about the credit must be shown together as a whole. Separately, any comparative claim of any kind (or as the regulations put it "any indication whether expressed or implied that any of the terms of the credit agreement imposed on customers impose a lesser expense or obligation than is being imposed by other persons") can only appear in a "full" credit advertisement, and this must be alongside, with no less particularity or prominence, the details of the other traders concerned and the comparable terms. (Seen any of these recently, or ever?). Other blanket rules are that "interest free" can only be used if the credit price does not exceed the cash price and "no deposit" can only be used when no advance payments whatsoever are to be made. In addition, the APR must be given greater prominence than any reference to any other interest rates and no less prominence than statements relating to (i) any period of time (ii) the amount of any advance payments or a statement that none is required or (iii) the amount, number or frequency of any other payments or charges except the cash price. There is also perhaps the only permissive rule contained in the 1989 Regulations, a provision allowing credit deal information to be conveyed by means of a worked example, provided it is reasonably representative.

So what are the do's and don'ts of a "simple" credit advertisement?
The maximum information that can be given about the credit aspect of the advertisement is the name of the advertiser, his logo or that of his trade association, his postal address, his telephone number and his occupation or its general nature e.g. "Joe Bloggs: Licensed Credit Broker".

What are the do's and don'ts of an "intermediate" credit advertisement?
In this category, there is compulsory and optional information. To be absolutely sure of compliance, reference should be made to the rules themselves, but in the case, for example, of a common newspaper car advertisement offering a credit deal to assist the purchase of the car, the following information will be compulsory:

the name of the advertiser and a postal address or telephone number of his unless in the case of a manufacturer's ad the name and address of a particular dealer is included;
a statement that written quotations are available on request;
where a cash price is given in the advertisement in relation to a specified car, either the APR or a statement indicating that the total amount payable is not greater than the total cash price of the product;
where the advertisement specifies a particular car which can be bought on credit from an identified dealer, the cash price of the car.
The following information is optional:

(a) a logo of the advertiser and/or his trade association;
(b) a statement of the advertiser's occupation e.g. "second hand car dealer";
(c) a statement that credit facilities are available and where applicable a statement indicating how long the facilities are available for;
(d) a statement indicating that credit is only available to persons falling within a particular identified class or group;
(e) the maximum or minimum amount of credit that is on offer;
(f) where the APR is specified, a statement as to whether any advance payment is required and if so the amount specified as a sum of money or as a percentage e.g. 50% deposit;
(g) a statement indicating any respect in which cash purchasers are treated differently from those acquiring by credit.

And what are the do's and don'ts of a "full" credit advertisement?
Again check the Regulation themselves but in our example of a standard credit advertisement for a car offering credit deals the following information will be compulsory:

the name of the advertiser and a postal address or telephone number of his unless in the case of a manufacturer's ad the name and address of a particular dealer is included;
a statement that written quotations are available on request;
where a cash price is given in the advertisement in relation to a specified car, either the APR or a statement that the total amount payable is not greater than the total cash price of the product;
where the advertisement specifies a particular car which can be bought on credit from an identified dealer, the cash price of the car.
if credit is available only to people falling within any particular class or group, a statement of that fact, identifying the class or group;
a statement of the frequency and number of advance payments required and the amount expressed as a sum of money or percentage;
a statement indicating any respect in which cash purchasers are treated differently from those acquiring the product on credit;
a statement of the frequency, number and amount of repayments of the credit on condition that no expressions such as "weekly equivalent" will be used unless weekly payments are actually required under the agreement;
a statement of the total amount payable by the debtor;
in the case of an advertisement specifying a particular vehicle which can be bought on credit, the cash price of that car;
Didn't I hear that the 1989 Regulations were due to be scrapped?
Over the near decade the Regulations have been with us, they have frequently been threatened with the axe on account of their inflexibility and complexity. Rumours of their impending demise, however, are somewhat exaggerated and although it is presently intended to scrap the "health warnings" which are required in the case of mortgage advertisements ("Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it") in broadcast advertisements, the rest of the CCAR's remain firmly in force, for the time being at any rate!

What is the penalty for getting it wrong?
The answer is that the fines and the legal costs can be quite substantial, as well as the public embarrassment.