2015年-FCA英国金融行为监管局_ms14_6_2_ccms_annex_9_6页_310kb

Credit Card Market Study – Interim Report: Annex 9 – Review of Financial Promotions

Summary Box

Our review of a sample of financial promotions found several key issues:

• A wide range of product choices may lead to consumer confusion.
• Small print is frequently used to explain key product conditions.
• The consequences of failing to make repayments or adhere to card conditions were not always prominent.
• Some firms are developing tools to aid consumer understanding and clarify the impact of certain behaviors, such as minimum repayments.

Introduction

The Financial Conduct Authority (FCA) conducted a review of financial promotions to understand how credit cards are promoted to consumers and whether they are provided with relevant information. The review aimed to assess whether consumers have the necessary information to make informed decisions and whether firms exploit behavioral biases in their marketing strategies.

Approach and Scope

• The review included a sample of 30 firms (credit card issuers and affinity partners) and approximately 230 promotions.
• Promotions were identified across print, digital, and broadcast media.
• Credit cards were categorized into four types: Standard Interest Rate, Balance Transfer, Low and Grow (poor or building credit), and Reward Cards.

General Findings

Product Choice

• A significant degree of choice exists among credit cards, with many providers offering multiple products.
• Comparison tools were available for some firms, but most simply listed key features without context, which may be less meaningful to consumers.
• Some providers included a 'best for' summary to assist consumers.

Representative APRs and Examples

• All promotions included a representative APR or example when required.
• APRs are based only on the purchase element, excluding fees for balance transfers, cash advances, and introductory rates.
• APRs are based on assumptions (e.g., full drawdown and equal repayment over 12 months) that may not reflect actual consumer behavior.
• Consumers may struggle to compare cards with the same APR but different fees or offers.

Eligibility

• About 50% of the promotions did not include eligibility information.
• Some promotions relied on external documents or summary boxes for eligibility details.
• A few providers offered eligibility checkers on their websites.

Conditions

• Most promotions used small print to explain key conditions.
• Headline rates and promotional offers were emphasized, while potential risks or drawbacks (e.g., introductory rates requiring timely minimum repayments) were not given sufficient prominence.

Websites

• Some websites included decision tools and sections on card suitability.
• Most websites featured an "Apply now" button directly beneath the promotional rate, which may lead to overlooking other important information located further down the page.

0% Balance Transfer Cards

• Most firms offered 0% balance transfer cards, but with varying offer lengths and fees.
• The lack of clarity on the "go to" interest rate after the 0% period was a concern.
• New FCA guidance emphasizes the need to clearly state this rate.
• Some promotions focused more on rewards than on the balance transfer feature, potentially misleading consumers.

Low and Grow Cards

• Designed for consumers with poor or building credit, these cards aim to help improve credit scores and increase credit limits.
• Promotions for these cards emphasized credit improvement benefits rather than rewards or promotional rates.
• They were predominantly promoted on websites.

Reward Cards

• Reward cards offer benefits such as airline miles, shopping vouchers, and cashback.
• There is no universal method for indicating the monetary value of rewards, making it difficult for consumers to compare cards.
• Some providers attempted to show reward value, but this was not consistent across all offers.
• Promotions often failed to clarify when cashback would be paid (e.g., monthly vs. annual).

Clarity on Interest Rates

• Financial promotions for 0% balance transfer cards generally provided relevant information.
• However, some did not clearly state the interest rate that would apply once the 0% period ended.
• This is particularly important for consumers who may not meet the card's conditions, as they could be charged the standard rate.

Key Recommendations

• Firms should provide clearer and more prominent information on potential risks and consequences of card usage.
• The use of decision tools and eligibility checkers should be encouraged to aid consumer understanding.
• Promotions should clearly indicate the "go to" interest rate after introductory offers.
• A standardized approach to presenting reward value and eligibility criteria would benefit consumers.