Where a financial promotion includes a rate of interest (excluding the representative APR) or an amount relating to the cost of credit it must include a ‘representative example’, and specify a postal address of the firm making the financial promotion (i.e. the postal address of the merchant). A rate of interest for this purpose is not limited to an annual rate of interest and would include a monthly or daily rate or an APR. An amount relating to the cost of credit would include the amount of any fee or charge, or any repayment of credit (where it includes interest or other charges).
It should be noted that a firm making the financial promotion does not need to specify a postal address when the promotion is being communicated by television or radio broadcast, or is on the firm’s premises, unless the promotion is made in writing which the consumer can take away.
The representative example must comprise the information listed in the standard information as shown on the following page and must be accompanied by the words ‘’representative example’’. It must be representative of agreements to which the representative APR applies and which are expected to result from the advertisement.
The representative example is unlikely to be representative if, for example, most consumers entering into agreements as a result of the financial promotion are likely to do so for a lower amount of credit than that indicated in the example, or with higher rates of interest or other charges than those indicated in the example.
A representative example MUST also include all of the following for a fixed sum regulated credit agreement (fixed duration):
The information contained in a representative example must be:
And given no less prominence than:
Guidance on total charge for credit.
The total cost of credit represents the true cost to the borrower of the credit provided, or to be provided, under a regulated credit agreement and includes fees and/or charges payable by the consumer to a credit broker.
Guidance on the total amount of credit.
The total amount of credit equates to the sum available to the consumer to use under the credit agreement (i.e. the credit limit) and does not include charges which are financed by the credit agreement; those are part of the total charge for credit.