A guide to promoting retail finance offering

We know that offering a range of flexible finance options attracts new customers and strengthens your relationship with existing ones. So you’ll understandably want to shout about your retail finance offering to let customers know about the different ways they can pay. However, you must ensure that any financial promotions you produce or use meet Advertising Standards Authority (ASA) and Financial Conduct Authority (FCA) requirements.

In this article, we explain the importance of creating compliant promotions for financial products and services.

What is a financial promotion?

The FCA define a financial promotion as “an invitation or an inducement to engage in investment activity that is communicated in the course of business.”

Put simply, anything that promotes, invites, or seeks to persuade a customer to take out a credit product can be considered a financial promotion.

This includes printed ads, signs and brochures displayed in-store as well as any promotional material published across your digital channels such as website banners and social media posts.

You should also ensure any conversations you may have with your customer about finance – known as ‘real-time financial promotions’ - follow the same regulations and guidelines.

What are the key requirements?

The ASA and FCA require all adverts to be:

• Legal, decent, honest and truthful
• Clear, fair and not misleading

This means all of your financial promotions must:

• Be clearly identifiable as an advert
• Be accurate, factual and truthful
• Use plain, easy to understand, jargon-free language
• Be balanced – you should ensure your financial promotion highlights benefits along with relevant risks or downsides
• Contain fair and meaningful claims
• Be suitable for the end customer
• Not disguise, omit, diminish or obscure any important information
• Clearly state your name, and that you are a credit broker
• Clearly state the name of the lender
• Not suggest that credit is available regardless of a customer’s circumstances
• Be compliant as a standalone promotion, not relying on any other information ‘a click away’

You must not mislead the availability of a credit product, suggest credit is ‘guaranteed’ or ‘pre-approved’, conceal or use a misleading firm name, or use false or exaggerated claims, testimonials, case studies or examples.

The FCA takes the monitoring of financial promotions very seriously. Between 1^st July and 30^th September 2023 alone, FCA interventions resulted in 5,310 promotions being amended or withdrawn by authorised firms. 41% of these cases were part of the Retail Lending sector. Don’t be complacent when it comes to compliance.

Including a regulatory disclosure

Retailers like yourself, dependent on your status and activities, are required to include a relevant regulatory disclosure across printed and digital promotions. This should state the legal name of your firm (and any relevant trading name), the nature of the service your firm provides, that you are a credit broker and not a lender, and whether you work exclusively with one or more lender. If required, the statutory status disclosure should also be included.

When you onboard with us, you’ll be provided with a relevant regulatory disclosure template that is most suitable for your business.

About compliant photography and imagery

Any images of goods must reflect the finance examples being displayed.

It almost goes without saying, but your financial promotions must not contain anything that is likely to cause serious or widespread offence either.

Understanding representative APRs and examples

If your financial promotion includes a ‘trigger’, you must display the representative APR. This is the APR at least 51% of customers get when taking out finance. As our interest rates are fixed, all successful customers will achieve the advertised rate. So, for our retail partners the representative APR is simply the APR of the product you’re advertising.

When you begin working with Novuna Consumer Finance, we’ll provide additional support and information to help you identify relevant ‘triggers’ to ensure your promotions are compliant.

If your financial promotion contains information about the rate of interest and an amount relating to the cost of credit, you’ll also need to include a representative example. This shows the customer what their repayment plan is likely to look like.

The importance of prominence

Pay close attention to the prominence of important information, key risks, required regulatory wording or statements. This not only means that key information needs to be included in the promotion – it also needs to be suitably highlighted, so those viewing your financial promotion will be drawn to the most important points. You can’t hide key points away in small font or sneak them into a footer.

Keeping financial promotions fair and balanced

When including a benefit as part of a financial promotion or communications, you must also include the relevant risk or downside.

As part of our in-depth Financial Promotions Guidelines, we provide features and benefits – and associated risks or downsides – for the finance options we provide. This gives our retail partners a ‘ready to go’ suite of information to help customers make an informed decision about whether a finance option is right for them.

Who’s responsible for keeping financial promotions compliant?

Ultimately, it’s the responsibility of yourself as the retailer to ensure any advertisements that promote the use of finance to your customers are compliant with current legislation and FCA rules. This means you must have systems and controls to ensure:

• Any colleague designing and approving promotions understands the rules
• You keep records of your promotions and their approval
• You update or withdraw any promotions which don’t meet requirements

The importance of keeping financial promotions compliant

Telling new and existing customers all about your credit options has obvious commercial benefit – but it’s also important to understand the risks:

• A promotion may be the only source of information customers base their decisions upon, so it’s important that we give the customer the right information at the right time
• If a customer chooses an unsuitable product the potential for harm is greater due to the complex and often long-term nature of financial products
• It’s the law – the FCA consider materially misleading advertisements as criminal breach of the Consumer Protection from Unfair Trading Regulations 2008

Find out more about the relevant FCA guidelines

If you’re keen to read up about the rules and guidance, please refer to the following:

• FCA: Section 3 of the FCA Consumer Credit Sourcebook
• FCA: Guidance on social media and customer communications – FG15/4
• ASA: Advertising Codes

If you’re looking to partner with a retail finance provider who puts your customers first, get in touch with our team.

*This article, and the Financial Promotions Guidelines provided during the onboarding process, outline the Novuna interpretation of the rules and regulations which apply to the products we provide. They are issued for guidance purposes only and are not intended to be used as legal advice. You may choose to seek independent legal advice on the compliance of any financial promotion that you produce or use.