UK credit rules face overhaul for mobile and social feeds
The Financial Conduct Authority has opened a consultation to strip out 14 sets of consumer credit advertising rules, citing the rise of social media marketing, Buy Now Pay Later, and mobile-first credit journeys.
The regulator wants firms to gain flexibility to tailor promotions for small screens, short videos, banner ads, and audio formats, while leaning on the Consumer Duty introduced in July 2023 to hold the consumer protection line.
The FCA’s Financial Lives 2024 survey found 79% of UK adults, or 42.5 million people, held at least one regulated credit or loan product in the previous 12 months, while the digitally excluded population has fallen from 6.9 million in 2017 to 1.2 million in 2024.
That shift has moved much of the credit journey onto mobile devices and social platforms, where firms say the existing rules force them to cram dense disclosures into formats that were never designed for them.
Radiocentre, the commercial radio industry body, told the FCA its testing showed simplifying advert rules could increase listener recall of key figures by three or four times.
Credit off of Instagram
The current rules trace back to the Consumer Credit Act 1974 and were transferred from the Office of Fair Trading to the FCA in April 2014, with most of the prescriptive detail copied across from regulations written for print, radio, and television.
The FCA notes the regime predates the smartphone-driven credit journey, the rise of Deferred Payment Credit, and the use of social media influencers in financial promotions.
Research cited in the consultation indicates that small screens and scrolling formats reduce integrated understanding and hinder readers’ ability to revisit key information.
The Department for Digital, Culture, Media and Sport has already pressed the FCA to consider the particular characteristics of radio and audio, arguing the current regime requires significant airtime and is costly to advertisers.
Representative examples, the boxed disclosures that list interest rate, total amount of credit, duration, and total amount payable, are singled out as especially difficult to display in social media adverts where firms face character limits and in short video formats where attention spans are measured in seconds.
The FCA notes that firms are already required to make key information prominent, use plain language, and tailor communications to the channel.
The regulator also plans to remove one provision entirely, which sets advertising rules for credit secured on land, on the basis that such lending is now extremely rare outside the regulated mortgage regime.
A question of percentages
Alongside the consultation, the FCA has issued a discussion paper on Annual Percentage Rate disclosure, the cost metric that has anchored UK credit advertising since the Crowther Committee report of 1971.
The regulator notes that a £100 payday loan over 30 days at the capped 0.8% daily rate produces £24 of interest but generates a representative APR of around 1,270% because the formula annualises the cost.
PricewaterhouseCoopers research commissioned by the FCA found few participants could explain what APR stood for, and most equated it with the interest rate they would pay rather than the total cost of borrowing including fees.
The FCA’s own Behavioural Economics team ran an online randomised controlled trial with around 15,000 UK adults, testing APR-only displays against hybrid approaches and a non-standardised cost information approach.
Showing APR alongside total amount repayable lifted the share of participants who correctly identified the lower total cost product to between 70% and 90%, an improvement of up to 53 percentage points over APR alone.
Allowing firms to use entirely non-standard cost information made consumer outcomes worse on average, with only 44% finding it easy to compare products when different metrics were shown for each.
What it means for fintech lenders and platforms
The FCA expects the rule changes to deliver one-off familiarisation costs of £7.33 million across more than 25,000 regulated firms, with annual benefits accruing through reduced administrative burden.
Mainstream lenders, fintech challengers, retail finance providers, and BNPL operators stand to gain the most flexibility, particularly in social media and app-based journeys. #
Price comparison websites, which Financial Lives 2024 found drove 67% of credit card shopping and 68% of personal loan shopping among those who shopped around, are likely to remain a key disclosure surface even as individual ads become more flexible.
The FCA also flagged concerns about credit cards with large annual fees, citing one issuer with a 29.4% interest rate but a £650 annual fee that produces a representative APR of 688.5%.
The regulator suggested that for these products, often used by transactors who clear balances monthly rather than revolvers who carry debt, the APR may be less meaningful for comparison.
