(This note is not part of the Regulations)
These Regulations impose requirements concerning the form and content of advertisements that relate to the provision of credit and the hiring of goods. They replace the Consumer Credit (Advertisements) Regulations 1989 (“the 1989 Regulations”), which are revoked. By virtue of regulation 10, these Regulations do not apply in relation to advertisements for loans or the hire of goods to businesses, to financial promotions or to advertisements for mortgages which are a first charge on the borrower’s home.
Whereas the 1989 Regulations provided for simple, intermediate and full credit and hire advertisements, each subject to different requirements regarding the information to be included, these Regulations contain a single list of items of information for inclusion in credit advertisements (in Schedule 2) and a corresponding list for inclusion in hire advertisements (in Schedule 3). Regulation 4 provides that an advertisement containing particular items in the relevant Schedule must include all of the other items listed.
Regulations 5 and 6 re-enact regulations 4 and 5 of the 1989 Regulations.
Regulation 7 provides for warnings previously required only in the case of full and intermediate credit or hire advertisements to appear in the case of any credit or hire advertisement which relates to a facility for which security is required. Paragraph (2)(b) of this regulation, relating to advertisements for credit to discharge debts owed to other creditors, is a new provision.
Regulation 8 sets out new provisions relating to the annual percentage rate of charge for credit (“APR”). Advertisers are required to specify a typical APR in any advertisement that contains particular financial information, makes particular claims or offers incentives. The typical APR is the rate the advertiser expects to charge in at least two-thirds of the transactions he will enter into as a result of the advertisement. In advertisements for running-account credit, such as is provided by way of credit cards, the APR must be calculated on assumptions set out in paragraph 1 of Schedule 1; these differ from the assumptions applied by the 1989 Regulations as regards the amount of credit taken as having been advanced, the interest rate applied and the manner in which credit is repaid.
Regulation 9 extends the restrictions on the use of particular expressions in credit advertisements to include expressions indicating that the provision of credit is not subject to status requirements or that it attracts a gratuitous benefit.
A full regulatory impact assessment of the effect that this instrument will have on the costs to business is available from the Consumer and Competition Policy Directorate of the Department of Trade and Industry, 1 Victoria Street, London SW1H 0ET.