meta_id 3110320

On April 29, 2026, the Financial Conduct Authority (FCA) published a Discussion Paper and Consultation Paper reviewing whether Annual Percentage Rates (APRs) effectively help consumers understand borrowing costs and support their purchasing decisions in credit markets. APRs indicate the yearly cost of borrowing, including interest and fees, with a representative APR meaning at least half of consumers receive that rate or better. Current rules require representative APRs in most credit advertising. The FCA's research, conducted by its behavioural economics team and PwC, reveals that while APRs are useful for product comparison, they do not always enable consumers to understand the true cost of credit. When an APR alone was presented to consumers, 80 percent correctly identified the cheapest product when the lower APR corresponded to lower repayment costs. However, fewer than one in five did so when the lower APR did not indicate cheaper borrowing. The research indicates that additional information, such as total repayment figures tailored to specific products, can enhance consumer understanding, though inconsistent presentation formats may complicate comparisons. The FCA is proposing to simplify the Consumer Credit rule book on credit advertising by removing duplication and outdated requirements where the Consumer Duty already establishes clear expectations for firms to support consumer understanding. The proposals explore more flexible ways of presenting loan costs to help borrowers make better-informed choices. Alison Walters, FCA director of consumer finance, stated the authority is seeking views on whether alternative approaches could better support consumers navigating credit products. The comment period for both papers closes on June 17, 2026. Responses can be submitted via the FCA's consultation portal.