The FCA is reviewing whether Annual Percentage Rates (APRs) help consumers understand borrowing costs and is seeking views on whether it should change how these are communicated in credit advertising.
APRs indicate the 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, but additional information like total repayment figures can also help consumer understanding. But providing different information tailored to different products can sometimes make comparison harder and confusing.
The research showed that, among those shown APR alone, 80% of people correctly identified the cheapest product when the lower APR meant a lower repayment. Fewer than 1 in 5 did so when the lower APR didn't mean cheaper borrowing.
Proposals to simplify parts of the Consumer Credit rule book on credit advertising have also been published. These aim to remove duplication and outdated requirements where the Consumer Duty already sets clear expectations for firms to support consumer understanding.
Alison Walters, director of consumer finance at the FCA, said:
'Clear information advertising credit helps people shop around. But there’s evidence that APRs do not always allow people to understand the true cost of credit. To help people navigate their financial lives, we’re asking for views on whether there’s a 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 17 June 2026.
Notes to editors
- Read the Consultation and Discussion Paper[2].
- This discussion paper is supported by two research papers:
- A behavioural experiment[3] conducted by the FCA’s behavioural economics team with consumers, which examines how different types of cost-of-credit information affect consumers’ ability to both understand and compare the cost of credit products.
- PwC’s consumer research[4] commissioned by the FCA examines how 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 choose different credit products.
- Most of the financial promotions rules in the Consumer Credit rule book pre-date the FCA taking over regulation in 2014, with some going back to 2004.
- The Consultation and Discussion Paper is in response to our commitment in the Feedback Statement on the Consumer Duty rule review (FS25/2)[5] to simplify our requirements on firms, including a review of the advertising rules for consumer credit.