UK FCA consults on changes to the financial promotion rules for consumer credit

The UK Financial Conduct Authority (FCA) has published consultation paper CP26/15, setting out proposals to review and simplify the financial promotions rules in the Consumer Credit sourcebook (CONC). This follows feedback to the 2024 call for input that the regime is overly complex and outdated, particularly in light of the consumer duty. The FCA proposes removing a number of prescriptive rules and guidance that overlap with the duty, while retaining key consumer protections. This includes the ability for consumers to bring private actions for breaches of the financial promotions rules, which is not available for breaches of the consumer duty. The draft rules also include minor amendments to CONC 3.3.1AG to reflect changes introduced by the Digital Markets, Competition and Consumer Act 2024.

Furthermore, CP26/15 includes a discussion paper on cost disclosure, seeking views on the effectiveness of representative annual percentage rate (commonly referred to as APR) disclosures in light of research that indicates a lack of understanding among consumers as to how APR functions as a measure of cost.

Alongside the consultation, the FCA published two pieces of research including: (i) a report examining how consumers engage with information at different stages of the credit journey and how this could be improved to support informed decision-making; and (ii) a research note exploring the trade off between a rules-based regulatory approach and the potential improvements in consumer understanding that may arise from the more flexible, outcomes-focused consumer duty.

The deadline for comments on the consultation (including the discussion paper) is 17 June. The FCA expects to publish its follow-up to the consultation later in the year, and will consider feedback to the discussion paper before deciding next steps.

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