Dealer guide to advertising finance

Transcription

1 Dealer guide to advertising finance September 2015

2 Contents Click to jump to a section Overview Putting the guidance into practice Frequently asked questions Examples of advertising

3 Overview We understand the importance of standing out from the crowd, getting your latest offers out there and catching the eye of potential customers. Always remember though, to stay compliant with the latest regulations, advertising to customers is not a simple task, especially when it comes to promoting finance products. This guide has been put together to help you understand the requirements when creating your own financial promotions and communications with customers. These have been set out in Chapter 3 of the Consumer Credit Sourcebook (CONC) by the FCA to ensure customers fully understand what is being sold to them. There are other regulations that you should also refer to including The CAP Code and the Consumer Protection from Unfair Trading Regulations It s important to remember The rules set out by the FCA apply to all forms of advertising credit such as print (leaflets, newspaper, magazine adverts) point of sale, television, radio, internet (social media, Google adverts, web page content), outdoor advertising and mobile media (SMS and s). Don t forget... Each advert created with CBMF details on needs to be approved by CBMF before it s published. Visit to find out how to get an advert authorised. The advert can only be used for the authorised period of time. At the end of this period the advert should be withdrawn from use. If you want to carry on using the promotion, further approval from CBMF will be needed.

4 Putting the guidance into practice

5 Putting the guidance into practice Before putting together an advert it is important to remember the advert should: Be clear, fair and not misleading. Be easily understandable, so make sure any unfamiliar terms are explained. Be easily legible or clearly audible. Include all information (not lessen or withhold any important information from the customer) Include the name of the person making the financial promotion (i.e. the dealer). Identify both the lender and the credit broker (identified using the full legal entity name, as listed on the FCA Register, as well as a trading name, where required) where the advert is released by a credit broker. Three important questions You should ask yourself each of the following three questions when putting together advertising. 1. Will the prospective customers be able to obtain finance from Close Brothers Motor Finance only? 2. Does your advert include an interest rate or an amount relating to the cost of credit? 3. Does the advert include any triggers? How you answer these determines what s needed on your advert, so let s look at how your answers affect what s needed in your advert.

6 Putting the guidance into practice 1. Will the prospective customers be able to obtain finance from Close Brothers Motor Finance only? If the answer is YES your advert should include the following statements If the answer is NO your advert should include the following statements We work exclusively with Close Brothers Motor Finance We can introduce you to a limited number of finance providers We may receive a commission for the introduction We may receive a commission for the introduction We act as a credit broker and not a lender We act as a credit broker and not a lender These statements are best displayed in the disclaimer of your advert. The last statement is best displayed in bold, to make sure it is prominent enough.

7 Putting the guidance into practice 2. Does your advert include an interest rate or an amount relating to the cost of credit? (For examples of these click here) If the answer is YES your advert should include BOTH If the answer is NO Proceed to Question 3 A postal address of the person making the financial promotion* A full representative example (For guidance on representative examples click here) *This is not needed if the financial promotion is made via radio or a point of sale item displayed on you, the dealer s premises.

8 Putting the guidance into practice 3. Does the advert include any triggers? (For examples of triggers click here) If the answer is YES your advert should include If the answer is NO your advert should include A representative APR* A full representative example (For guidance on representative examples click here) *The representative APR must be more prominent than any other triggers. It must be shown as %APR and accompanied by the word representative.

9 Frequently asked questions

10 Frequently asked questions When you say examples of interest rates or amounts relating to the cost of credit what do you mean? Any rate of interest, whether it is annual, monthly, weekly or daily. A reference to 0% finance/credit. A monthly payment where the interest is more than 0% APR Representative. Costs such as administration costs, any fees (including any dealer fees charged to the customer) or interest amounts. Remember, if your finance advert includes any of these you need to include: A postal address of the person/business making the financial promotion (unless the financial promotion is via the radio or a point of sale piece on the dealer s premises). A full representative example (For guidance on this see below). What does a representative example need to include? A full representative example MUST include ALL of the following: The representative APR (this should be displayed eg. 3% APR Representative). The cash price. The amount of any deposit or other advance payment. The total amount of credit. Rate of interest (specified as a per annum rate and state that it is fixed). A description and amount of any fees (option to purchase, arrangement fee, document fee) or charges included in the total cost of credit and an indication of when these fees are payable (e.g.. the option to purchase fee is payable with the final payment) should be noted within the financial promotion, this can be in the small print. The duration of the agreement (term). The total amount payable. The amount and frequency of each repayment (if one month is different this needs to be shown). All the items within the representative example must be: Specified in a clear and concise way (a table is a good way to show this). Accompanied by the words representative example. Presented together with each item and given equal prominence (do not highlight or repeat any of the finance figures in a headline outside of the representative example, such as the monthly rate). The representative example must be given greater prominence than any information relating to the cost of credit and any indication of favourable terms or incentives stated in the financial promotion. For further advice on representative examples click here

11 Frequently asked questions What are triggers? Triggers are statements that indicate in any way one or more of the following statements: That credit is available to someone whose access to credit may be restricted. This could be done by promoting the availability of credit to borrowers with poor credit history or using wording in an advert such as: Been refused credit? Do you have CCJs and find it difficult to obtain credit? The terms of the credit are more favourable than other credit offers from other lenders. This could be done by using terms such as: Our lowest rates ever Low rates (must be low compared to the rest of the market) Low rates until 31 st March No deposit on orders over 10,000 Buy now, pay later No fees on loans over 10,000 2% off our usual rates The advert includes an incentive. This could include: Cashback available with credit only Any gift or added extra only available with credit The advert includes the following terms or similar, relating to the ease of making an application for credit or the speed at which fund would be received: Quick and easy application for credit Funds in your account within 1 hour What if my advert doesn t have any financial information or triggers on it? In this case you may advertise CBMF and its services by way of an image advert. Image advertising is a communication that consists of one or more of the following: CBMF name. A logo or other image associated with CBMF. A contact point (such as an address, telephone number, address or website URL). Reference to the types of finance CBMF provides. As ever, it is important to be clear, fair and not misleading. Image adverts must be approved by CBMF before they are published. Visit www. closemotorfinance.co.uk/advertising-finance to find out how to get an advert authorised. The advert can only be used for the authorised period of time. At the end of the authorised period the advert should be withdrawn from use. Further approval will be required from CBMF for adverts to be used after this date.

12 Frequently asked questions What do you mean by prominence? Displaying certain pieces of information more prominently, plays an important role in ensuring that a financial promotion is clear, fair and not misleading. It s important to consider positioning of text, background, colour and type size. What s needed when advertising specific finance products? Include the full name of the finance product being advertised, explaining any abbreviations (e.g. PCP - Personal Contract Purchase). When advertising a Conditional Sale, Hire Purchase or Personal Contract Purchase finance product, your terms and conditions should contain the following: You will not own the vehicle until all payments are made If you are advertising PCP or HP finance on a 0% APR Representative offer, without the use of a representative example and a balloon payment is required, this balloon payment needs to be mentioned on the advertisement. The options available to the customer at the end of the finance period should also be explained on the advert. Use of incentives, comparisons and gifts Interest free can only be included where there are no fees or charges. For example, if the total amount payable is the same amount as a customer, who would have paid cash for the vehicle, would have been charged. No deposit or similar terms can only be used where no advance payment is needed from the customer. Gift, present or similar words can only be used if the customer can keep them, even when the finance application is not completed. You can only mention a frequency of a payment if it is provided for under the agreement. For example, a weekly payment amount can only be included if weekly payments are allowed under the finance agreement. What other information do you need to include in the advert? Finance cannot be offered regardless of a customer s credit status. Wording, such as Finance is subject to status should be included. Terms and Conditions apply, 18s or over only also needs to be included. If you require a minimum deposit this should be specified in the main body of the advert. This should be qualified with a statement that lower or no deposits will result in higher monthly payments Where there is no representative example already stating the information, the available term of the contract should be stated. Any other terms that could stop customers qualifying for the offer advertised should be stated. If the credit advertised requires security a statement including the nature of the security should be included (i.e. guarantees/indemnities may be required ).

13 Examples of advertising Click to jump to a section Representative examples Flyers/Posters

14 Examples of advertising Representative examples The aim of a representative example is to show consumers the typical costs associated with a product being advertised. These are sometimes displayed on there own, in vehicles for sale, but there are also times when a representative example is needed as part of a larger advertisement. Specifying the product being advertised The cash price of the vehicle The amount of deposit is stated The total amount of credit is shown Fees have been listed The cost of the final payment is outlined with further explanations in the small print Personal Contract Purchase (PCP) Representative example Make/model: Cash price Customer deposit Total amount of credit Rate of fixed interest per annum % Acceptance fee x monthly payments of Optional final payment* (GMFV)** Option to purchase fee + Total amount payable The wording representative example is included The rate of interest is present, stated as fixed and specified as per annum The amount and frequency of payments is included The total amount payable is shown As PCP finance contains a yearly mileage cap, this is also specified, to inform the customer fully Representative APR Mileage per annum % APR Terms Finance available to UK residents of 18 or over and is subject to status. Indemnities may be required. Finance provided by Close Brothers Motor Finance. Close Brothers Motor Finance is a trading style of Close Brothers Limited ( CBL ), a subsidiary of Close Brothers Group plc. CBL is registered in England and Wales with company number and registered office at 10 Crown Place, London EC2A 4FT. Close Brothers Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. Firm reference number At the end of the agreement there are three options: (1) Part exchange the vehicle. (2) Pay the optional final payment and own the vehicle. (3) Return the vehicle. You will not own the vehicle until all payments are made *Optional final payment may include an excess mileage charge of 10 pence per mile, if applicable, and is subject to change. Please refer to the dealer for further information. **Guaranteed minimum future value. +Option to purchase fee will be payable if you wish to own the vehicle at the end of the agreement. Terms and conditions apply. The APR is shown, in the right format % APR and accompanied with the word representative The various terms of the agreement are specified in the small print including who is elligble andthe options for the customer at the end of the agreement

15 Examples of advertising Flyers and Posters Posters and flyers are a good way to advertise promotions. When a special rate is available or a new model vehicle has been released, a poster or flyer gets the information in front of customers, either on showroom walls or as a handout. Flyer/Poster - case study 1 Car Market, a dealership working exclusively with CBMF, are trying to attract customers who have previously been refused credit. In it s current state CBMF would not be able to approve this advert. Making a few simple changes would help make this compliant. The advert is clear, fair and not misleading. The advert is understandable. The advert is legible. Important information, including the finance provider address has been withheld. An address is required on a handout flyer, but this is not necessary for a poster. The name of the lender, in this case CBMF, is included. However, more information is needed. The advert is being released by a credit broker so should include Car Market s legal entity and trading name. What about the three questions mentioned previously? 1. Will the prospective customers be able to obtain finance from CBMF only? YES As the answer is YES the advert MUST contain the same statements as the previous examples. 2. Does your advert include an interest rate or an amount relating to the cost of credit? NO As the answer is NO nothing needs to be done. 3. Does the advert include any triggers? YES As the answer to this question is YES, the advert MUST: Include a representative APR. The representative APR must be more prominent than any of the triggers It must be shown as %APR and accompanied by the word representative

16 Examples of advertising A representative APR has now been added This has to be shown as % APR and accompanied by the word representative The small print has been expanded to include important information for the customer All three statements have now been added. With the last one emboldened to help prominence. The statements Finance available to UK residents of 18 or over and is subject to status and Terms and conditions apply has been added. This is required as these are terms that apply to providing finance, as it can t be offered regardless of a customer s credit status. Information on the finance provider (CBMF) has been included.

17 Examples of advertising Flyer/Poster - case study 3 Car Market, a dealership working exclusively with CBMF, are promoting new models of car. Although the advert they put together may seem to be finished, when we look at it against the requirements, it s obvious that further changes need to be made. The headline statement We ll give you the best rates on new models is misleading. This would need changing as Car Market can not guarantee this The advert is easily understandable. The advert is legible. Important information a customer would need isn t included, especially considering: The name of the lender, in this case CBMF, is not included. As the advert is being released by a credit broker, in this case Car Market, all their details need to be included. What about when we look at the three questions mentioned previously? 1. Will the prospective customers be able to obtain finance from CBMF only? YES As the answer is YES the advert MUST contain the following statements: We work exclusively with Close Brothers Motor Finance We may receive a commission for the introduction We act as a credit broker and not a lender - Which needs to be prominently stated within the financial promotion. In the small print and in bold would achieve this. If the answer was NO then it would need to contain the following statements: We can introduce you to a [limited] number of finance providers We may receive a commission for the introduction We act as a credit broker and not a lender - Which needs to be prominently stated within the financial promotion. In the small print and in bold would achieve this 2. Does your advert include an interest rate or an amount relating to the cost of credit? YES As the answer is YES a representative example will be needed. Examples of this can be found later in this guidance. You also need to include a postal address of the person making the financial promotion* *This is not needed if the financial promtoion is made via the radio or a point of sale item displayed on you, the dealer s premises. Applying these changes, along with the rest of the FCA s guidance, mean the revised advert will be fully compliant.

18 Examples of advertising The headline messaging has been changed This way it doesn t mislead and communicates to customers what the advert is about. Important information for the customer has now been added This includes details of the dealer, including their phone number and website. The CBMF logo has been added. The statement You will not own the vehicle until all payments are made has been added. This is needed when advertising Conditional Sale, Hire Purchase (HP) or Personal Contract Purchase (PCP). A representative example has now been included The representative example needs to be displayed in a clear and concise way. A table, like the one shown, is a good way of doing this. The type of finance, in this case Conditional Sale, needs to be shown as well as the words Representative example. Each item should be given equal prominence with no finance figures repeated outside of the representative example. The large APR figure that was on the first design has been removed because of this. The statement Indemnities may be required has been added. This is needed because the finance offered requires security. As the advert now contains an interest rate and amount relating to the cost of credit (see question 2) a postal address of the dealership making the financial promotion (this wouldn t be needed if the financial promotion was via the radio or a point of sale piece on the dealer s premises). Information on the finance provider (CBMF) has been included. The statements Finance available to UK residents of 18 or over and is subject to status and Terms and conditions apply have been added. These are needed as they are terms that apply to the providing of finance. Finance can t be offered regardless of a customer s circumstances and credit status.

19 Examples of advertising Flyer/Poster - case study 2 Rev Motor Group, a dealership working exclusively with CBMF, are promoting a new model car. With the guidance in mind it is clear that in order to be compliant some changes will need be made to this advert. The representative example is not very clear and some details regarding finance are missing, which could be seen as misleading. The advert could be more understandable by explaining abbreviations. The advert is legible. Certain items are missing from the representative example. This important information should not be withheld. The name of the lender, in this case CBMF, is included. However, more information is needed. The advert is being released by a credit broker, in this case Rev Motor Group. Their legal entity and trading name have been included. Let s look at the three questions previously mentioned? 1. Will the prospective customers be able to obtain finance from CBMF only? YES As the answer is YES the advert MUST contain the following statements: We work exclusively with Close Brothers Motor Finance We may receive a commission for the introduction We act as a credit broker and not a lender This has been done but the statement We act as a credit broker and not a lender should be in bold to help prominence. 2. Does your advert include an interest rate or an amount relating to the cost of credit? YES As the answer is YES the advert MUST include BOTH: A postal address of the person making the financial promotion (unless the financial promotion is via the radio or a point of sale piece on the dealer s premises). A full representative example. Although these are currently on the advert the layout of the representative example should be changed, to help with clarity. 3. Does the advert include any triggers? NO In which case a representative example is needed. The one that s on the advert will need changes as not all the information needed is present.

20 Examples of advertising The small print has been expanded to include important information for the customer All three statements have now been added. With the last one in bold to help prominence As the finance advertised is PCP, the options available to the customer at the end of the agreement have to be outlined. The statement You will not own the vehicle until all payments are made has been added. Both the optional final payment and the abbreviation GMFV have been explained here. It is important that any terms that could be unfamiliar to customers are explained. Terms and conditions apply has been added. This is required as these are terms that apply to providing finance, as it can t be offered regardless of a customer s credit status. The representative example has been altered The representative example needs to be displayed in a clear and concise way. A table, like the one shown, is a much better way to show this than the list used on the first design in this case study. The words Representative example. need to be shown. The type of finance, in this case Personal Contract Purchase (PCP), needs to be shown. As PCP may be an unfamiliar term to the customer, it s important to include the full name. The statements Finance available to UK residents of 18 or over and is subject to status and Terms and conditions apply have been added. This is required as these are terms that apply to providing finance, as it can t be offered regardless of a customer s credit status. Information on the finance provider (CBMF) has been included. Each item should be given equal prominence with no finance figures repeated outside of the representative example. The large APR figure, that was on the first design in this case study, has been removed because of this.