MoneySavingExpert highlights scourge of representative APRs

Martin Lewis follows Debt Hacker’s lead in demanding FCA protect consumers.

4 April 2022: Credit providers must offer the “representative APRs” they advertise to 51% or more applicants they accept. But Debt Hacker gave shocking evidence to Parliament last year that at least one lender attracts customers by offering representative APRs well below what most customers pay.

Our investigation revealed customers’ lived interest rate experience can be multiple times an advertised representative APR and, astonishingly, that the Financial Conduct Authority (FCA) does not carry out independent periodic checks on representative APRs.

Our evidence, given to the All Party Parliamentary Group (APPG) on Personal Banking and Fairer Financial Services in November 2021, was covered by The Financial Times in January 2022.

The FCA may fail the public by standing by while some firms overcharge borrowers. We asked, "how can consumers rely on advertised representative APRs not checked independently by anyone? How can the public trust that 51% or more borrowers get the advertised representative APR when there are no independent periodic checks?”

Today respected money advice blogger Martin Lewis of MoneySavingExpert launched a campaign to ensure more credit applicants get representative APRs advertised by firms.

It’s a welcome addition to the work Debt Hacker has engaged in for years. Lewis’s public profile means the regulator and Treasury cannot continue to avoid the issue. But let’s be clear: Debt Hacker has alerted senior staff at the FCA (including Brian Corr, its Interim Director of Retail Lending, and his deputy) to this on multiple occasions, stretching back over many months. We gave comprehensive evidence to Parliament in November. We have contacted members of the Treasury Select Committee too.

So it grates to see the FCA “welcoming” Lewis’ campaign when it has known about the problem for over a year. Thousands of consumers would likely have been protected from firms’ “bait and switch” if the FCA had, as Debt Hacker urged months ago, made spot checks comparing companies’ actual APR interest rates with those advertised.