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Regulator admits APRs are confusing

‘APR is not perfect but it does give the customer a fighting chance’

The FSA has admitted that APRs are flawed and confuse providers and consumers.

During an open forum at this year’s Mortgage Business Expo in London, it was revealed that many in the industry object to the FSA’s recommendations that an APR has to be published in promotional material because of the large number of variables.

John Charcol senior technical manager Ray Boulger has said that brokers cannot just look at the headline rate as it could be misleading.

Companies must state what 66 per cent of people could get as an APR on any given product. But FSA manager of communications and strat- egy Christopher Atkinson, admitted that there was a lot of confusion as to what the 66 per cent rule was.

However, he said the regulator did not want to appear heavy-handed and was not willing to provide hard and fast rules for every type of promotion. The delegates were reminded that the FSA does not regulate products.

Atkinson also warned that the regulator would be clamping down on internet adver- tising, particularly in the sub-prime mortgage sector. The main concerns that he identified were over the adequacy of warnings and the prominence of information, espec- ially APRs.

The FSA said it had been in contact with firms that advertise online but some of their reactions were “disappointing”.

Atkinson said: “The different types of products need to be sold with proper information. We are aware that APR is not perfect but it does give the customer a fighting chance.

“We have been in contact with a number of companies promoting their products online and if the changes we have advised on are not acted on then action may be taken.”


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