Credit Advertising and the FCA: Why Weakening APR Rules Risks Harming Households

The Centre for Responsible Credit (CfRC) recently responded to the Financial Conduct Authority’s (FCA) consultation (CP26/15) on proposed changes to credit advertising and representative APR rules.

Our response draws directly on our January 2026 report, Good Score, Empty Cupboard, which surveyed 3,400 low-to-middle-income (LMI) adults across Great Britain. The findings paint a worrying picture of how credit score dashboards—platforms like Experian, ClearScore, and Credit Karma—are functioning.

Far from being neutral tools just for checking a credit sore, these platforms act as commercial credit brokers.

When consumers log in to check their scores, they enter a highly monetised ecosystem. Over half (55%) of the LMI dashboard users we surveyed had been offered extra credit while checking their score.

• 49% felt these targeted offers encouraged them to take on more credit than they could afford.
• 28% felt the messaging they received pressured them to accept.
• Within six months of taking up the offers, 18% struggled with the new repayments, 18% had to cut back on essential spending and one in ten missed payments or defaulted.
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These offers are usually shown after a "soft search" has been combined with additional information provided by consumers regarding their income, employment and household composition etc. Available offers are then displayed, together with each product’s “representative” APR rate. This is the moment the consumer decides whether to apply—and it is precisely where clear cost presentation matters most.

Protecting the representative APR and highlighting maximum costs

Not everyone who applies for credit will, in fact, get it at the “representative” APR they see on the credit score dashboards. The current rule requires that a representative APR must be applicable to at least 51% of successful applicants. But 49% of applicants could receive a different, and in many cases, higher rate than this.

The consultation considers the removal of the term “representative”, or possible changes to its definition.  Removing the word "representative" for credit offers would strip away the final signal that a rate is provisional rather than guaranteed. This is incredibly dangerous at a moment when marketing tactics use terms like "pre-approved" to create a false sense of certainty.

Alongside keeping the 51% threshold, firms should be required to show the highest APR that might be charged. This is the simplest, least burdensome way to give consumers a concrete warning about the worst-case scenario and the range of outcomes they could face.

Short-Term Credit: High APR is not a flaw

Wider questions are also posed about the value of the APR figure itself, and whether this should be replaced or accompanied by other metrics. The proposals here are puzzling, because the FCA’s own commissioned behavioural research found that the APR metric performs well for consumers, that non-standardised alternatives lead to worse outcomes, and that a flexible regime risks causing direct harm.

The agenda to abandon APR appears driven by short-term credit lenders. Lenders of short-term credit frequently criticise the APR calculation because it results in eye-catching rates running into the hundreds or thousands of percent. They argue it is misleading for short-term products.

We completely disagree. The high percentage is a strength of the system, not a flaw.

APR does more than calculate interest, fees and charges; it factors in the time value of money, which directly determines the repayment burden. Repaying a £500 loan over 30 days is vastly different from paying it back over 12 months, even if the total costs charged are identical. The shorter term creates a much higher repayment burden and leaves a tight household budget with almost zero room to manoeuvre.

Annualising the cost strips away clever marketing framing (like focusing on a flat fee or "a few pounds a week") and signals the true weight of what the borrower is taking on. Removing APR for short-term loans would mislead consumers into thinking these short, high-burden loans carry no greater risks than longer-term credit.

However, we agree that APR shouldn't stand alone. To give borrowers complete clarity, the FCA should:

1. Provide lenders with explicit guidance on how to better explain the repayment burden element of the APR calculation.
2. Require APR disclosure to be paired with a total amount repayable figure —giving consumers a single, concrete cash value of what they will hand over.

The "credit utilisation" regulatory gap

Our research also exposed a critical regulatory blind spot that this consultation completely ignores: credit limit utilisation rate messaging.

Dashboards routinely display "tips" advising users to keep their credit utilisation below a specific threshold (often 30%) to protect or boost their credit score. While framed as harmless financial education, it triggers a structural conflict of interest. To lower their percentage, consumers can either pay down debt or take out more credit—such as a new credit card sourced directly through the platform's own broking links.

The platform profits via commissions when users follow these "tips" to reduce their credit limit utilisation rates by borrowing more. Because this messaging doesn't unambiguously name a specific product or quote a rate, it slips through a regulatory gap, bypassing traditional financial promotion protections. We are therefore recommending the FCA consult on broadening existing guidance (CONC 3.3.10G(7)) so it applies strictly to credit brokers as well.

High-level principles are not enough

Our evidence was gathered more than two years after the FCA’s Consumer Duty came into force. The fact that these harms are actively occurring proves that high-level, principles-based regulation alone is not preventing poor outcomes. Where specific rules and guidance exist, they should not be removed without clear evidence that the same outcomes will be achieved at a lower cost. We can’t see that evidence in the current consultation document.

Principles-based regulation is only as good as the outcomes it delivers. With low-to-middle-income households facing severe repayment pressures, now is the time for the FCA to tighten rules and close regulatory blind spots. We urge the regulator to maintain the integrity of APR disclosures and close the regulatory gap in the credit score dashboard market.

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