The FCA commented that it had seen promotions such as social media influencer posts where the benefits of BNPL products have been emphasised without prominent indications about any relevant risks. The FCA is concerned that consumers could be misled if they do not fully understand the repercussions of missed payments and the impact it would have on their credit file and potential charges they may incur as a result.
With the rising cost of energy and a further rise in the energy cap expected in early 2023, consumer are going to be under increasing pressure to pay their bills. As such, firms need to ensure that consumers are fully aware of all potential consequences. The FCA’s new Consumer Duty rules require authorised firms to avoid potential harm by monitoring consumer understanding.
The FCA has also indicated that it will be proactively monitoring all advertisements and failing to comply with the rules could result in a fine, withdrawal of permissions, or a criminal offence. To date in 2022, the FCA has taken action against firms breaking the rules. As a result 4,226 promotions have been withdrawn or changed. To protect consumers, the FCA has warned that it will use all of its existing powers against firms where adequate information on the risk and consequences of unpaid or unaffordable dept is not clear to the consumer.
Key takeaways for lenders:
- Provider consumers with the right financial information so they can make effective, timely and properly informed decisions
- Be clear about any relevant risks of taking on credit
- Ensure customers fully understand the impact and repercussions of missed payments.
- Authorised firms and merchants must ensure that they comply with the requirements in CONC 3 regarding financial promotions