FCA reviewing whether APRs support consumers’ choices
The FCA is reviewing whether Annual Percentage Rates (APRs) help consumers understand borrowing costs andis seeking views on whetherit should changehow these are communicated in credit advertising. APRsindicatethe yearly cost of borrowing, including interest and fees. A representative APR means at least half of consumers receive that rate or better. Current rules require representative APRs in most credit advertising.Research, published today, shows APRs are useful for comparing products, butadditionalinformation like total repayment figures can also help consumer understanding.But providing different information tailored todifferent productscan sometimes make comparison harder and confusing.Theresearch showed that, among those shown APR alone,80% of people correctlyidentifiedthe cheapest product when the lower APR meant a lower repayment. Fewer than 1 in 5 did so when the lower APRdidn'tmean cheaper borrowing.Proposals to simplify parts of the Consumer Credit rule book on credit advertisinghavealso been published.Theseaimto remove duplication and outdated requirements where the Consumer Duty already sets clear expectations for firms to support consumer understanding.AlisonWalters, director of consumer financeat the FCA, said:'Clear information advertising credit helps people shop around. But there’s evidence that APRsdonot always allow people to understand thetrue costof credit. To help people navigate their financial lives,we’reasking for views on whetherthere’sa better way.'The Discussion Paper published today, alongside the Consultation Paper on stripping back overly prescriptive requirements, focuses on whether more flexible ways of presenting loan costs could help borrowers make better informed choices.The Discussion and Consultation Paper closes on 17June 2026.Notes to editorsRead the Consultation and Discussion Paper.This discussion paper is supported by two research papers:Abehavioural experimentconducted by the FCA’s behavioural economics teamwith consumers,which examines howdifferent typesof cost-of-credit information affect consumers’ ability to both understand and compare the cost of credit products.PwC’s consumer researchcommissioned by the FCAexamineshow credit consumers engage with information communicated to them across the consumer journey and consumer credit products. The research explores consumers’ understanding of APRs and how consumers use APRs to compare and choosedifferentcredit products.Most of thefinancialpromotionsrulesintheConsumer Credit rule bookpre-date the FCA taking over regulation in 2014, with some going back to 2004.TheConsultation andDiscussionPaperisin response to our commitment in the Feedback Statementon the Consumer Duty rule review (FS25/2) to simplify our requirements on firms, including a review of the advertising rules for consumer credit.