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        • Case work examples

This case work example describes a case we have acted upon. It is designed to help firms understand our analysis, the issues that may lead us to contact firms and the action that may result. It does not set any kind of precedent or guide about the action we may take on similar cases in the future.

Issue

The firm provided a search function for the "best" financial products available on the market. The firm's website was promoting a mortgage, and suggested in the promotion that introductory rates from less than 3% APR were available to those with poor credit.

Our concern was that this was potentially misleading for consumers with poor credit looking for a mortgage as it was unlikely that this rate would be available to at least 2/3 of the population applying for the product, as required by the financial promotions rules.

Action taken

In response to the our concerns, the firm agreed to withdraw and amend the promotional material on the website to ensure that it was clear which rates were available to different categories of borrowers.

Lessons learnt

When considering whether the promotion for an adverse credit mortgage is correct, firms should consider whether the APR is set at, or below, the level to which at least 66% of the customers responding to the promotion and who enter into a qualifying credit agreement which is the subject of the promotion, would be charged.

In practice, this goes beyond ensuring that, of the potential borrowers visiting the website (which will include both credit impaired and non-credit impaired borrowers), whether 66% or more of these borrowers would be eligible for the rate. Instead, a firm should ensure that, of the credit impaired borrowers applying for the product, at least 66% of those would be eligible.

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