Advertising, Commercial Communication and Fraud Warning Signs
Fair, clear and not misleading
Advertising for consumer credit is regulated content, not free speech. Any commercial communication must be fair, clear and not misleading, and must not minimise the seriousness of the commitment. Where an advertisement states a rate, an amount, a term or a cost, it must also state the APR, the total amount of credit, the total cost and, where relevant, the number and size of instalments. Prominent headline figures must not be contradicted by small print.
Prohibited and risky claims
Rules target: promises of credit "without any conditions" or "guaranteed", statements suggesting credit improves financial health, encouragement to borrow beyond means, and use of official-looking logos or names implying state or regulatory endorsement. The FSMA actively publishes warnings about unauthorised lenders and clones of legitimate firms.
Warning signs of credit fraud
A candidate should recognise the red flags examined in fraud questions:
- A request for an advance fee before any credit is granted ("administrative costs", "insurance deposit").
- Pressure and urgency, or offers far below market rates.
- Communication only by messaging apps or free email, no verifiable registered address.
- Absence from the FSMA register, or a registration number that belongs to another firm.
- Requests for identity documents, bank codes or card details before a contract exists.
- Contracts sent without the required pre-contractual information or withdrawal notice.
Traps
A clever trap presents a firm quoting a real FSMA registration number - the correct response is that the number does not prove the firm is the registered entity; the register must be checked by name. Another trap suggests that a low advertised rate alone is unlawful; it is not, but an advertisement showing a rate without the APR is.
Rule of thumb
If money must flow to the lender before credit flows to the consumer, treat it as a fraud indicator and verify the register first.