Klarna Docs - Representative Example

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): 

  1. The rate of interest and whether it is fixed  or variable or both, expressed as a fixed or  variable percentage applied on an annual  basis to the amount of credit drawn down 
  2. The nature and amount of any other charge  included in the total charge for credit 
  3. The total amount of credit  
  4. The representative APR 
  5. In the case of credit in the form of a  deferred payment for specific goods,  services or other things, the cash price  and the amount of any advance payment 
  6. The duration of the agreement 
  7. Total amount payable; and 
  8. The amount of each repayment of credit  

The information contained in a representative  example must be: 

  • Specified in a clear, concise and prominent way 
  • Accompanied by the words “representative example” 
  • Presented together, with each item of  information being given equal prominence 

And given no less prominence than: 

  • Any other information relating to the cost of  credit in the financial promotion; and 
  • Any indication or incentive encouraging the  consumer to apply for credit 

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.