Sunny adverts not following FCA or ASA guidelines

Consumer complaints have led to the Advertising Standards Agency banning adverts from Sunny for a third time. The issue is mostly the same as in the past in that the payday lender is not properly disclosing the Annual Percentage Rate (APR). This is a requirement per Financial Conduct Authority regulations.

The risk is that families who turn to these high priced consumer credit firms such as Sunny could take out a loan and not realize that the APR can be as high as over 1900% in some cases. The ads being shown by the firm are not stating this to potential borrowers. So the ASA has determined that Sunny is misleading people.

Not only is the APR not being shows, but Sunny is also telling consumers that they can repay the loan without penalties. So they are in effect claiming this is a benefit just for their borrowers, however this is a law given to all consumers of any loans, not just Sunny. The FCA created regulations in 2014 as part of Consumer Credit Act which allowed early repayment to occur for any borrower from any payday firm.

However Sunny is contesting the ban. They are claiming that the advert being assessed did not require the APR to be shown to consumers as the loan offered flexible repayment terms. Sunny is claiming that they are one of the firms that allows borrowers to repay early at any amount they want. They can also make full or partial payments on these loans as well. Due to this additional flexibility given to consumers, the APR rate varies as the amount that is repaid will vary from what the original terms were.

Using laws set by the FCA, the Advertising Standards Agency is stating that these flexible terms could cause families to take out additional money that they do not need. So it can encourage borrowing. Many of the people turning to lenders such as Sunny are truly struggling, and they could be enticed by quick access to cash, which can cause future problems.

So in these cases in which borrowing may be encouraged, the ASA argues that the Annual Percentage Rate needs to be shown. They also say that this is a feature given to all payday lenders as part of the Consumer Credit Act, and this is not a benefit just for Sunny.

The ban will be in effect until future ads show Annual Percentage Rate. The lender, who is owned by Elevate Credit International, has also been told that they need to also include a comparison. The Advertising Standards Agency is assessing other Sunny adverts as well. In the meantime, this too is leading to the ban on the company.