What is Mis-selling of Credit Products?
Mis-selling of credit products happens when financial providers – such as banks, lenders, or brokers – sell credit agreements like loans, credit cards, or mortgages in a way that is misleading, incomplete, or unsuitable for the customer’s needs. Under UK law, including the Consumer Credit Act 1974 and regulations set by the Financial Conduct Authority (FCA), lenders must ensure that credit products are clearly explained and only sold if they are appropriate for your circumstances.
Common examples of mis-selling include not providing all the necessary information about interest rates, fees, or repayment terms; failing to check if you can afford the repayments; or pressuring you into taking out credit you don’t need. Sometimes, products like payment protection insurance (PPI) or expensive add-ons may be included without your clear consent. Mis-selling can also occur with newer products, such as buy-now-pay-later agreements, especially if risks and costs are not made clear.
Being mis-sold credit can lead to financial difficulties, such as unaffordable debt, extra charges, or damage to your credit score. These issues often overlap with broader unfair debt practices, where lenders or debt collectors treat borrowers unfairly.
If you believe you have been mis-sold a credit product, you have rights under UK law to make a complaint and potentially seek compensation or have the agreement reviewed. Understanding your rights is the first step towards resolving the issue and protecting yourself from further financial harm.
Common Types of Mis-selling in Credit Products
Mis-selling of credit products can happen in several ways, often leaving consumers with financial products that are unsuitable, misleading, or unfair. Some of the most common scenarios include:
Buy-Now-Pay-Later (BNPL) Misinformation
Buy-Now-Pay-Later schemes have become increasingly popular, but not all providers clearly explain the terms and risks involved. Mis-selling can occur if you are not properly informed about interest rates, fees, or the consequences of missed payments. This can lead to unexpected debt, damage to your credit score, and difficulty managing repayments. Recent regulatory changes aim to improve consumer protection in this area. To learn more about how these rules affect you, see Buy-Now-Pay-Later (BNPL).
Unnecessary Add-on Products
Another common issue is the sale of unnecessary or unsuitable add-on products, such as insurance or warranties, alongside credit agreements. Sometimes called “upselling,” this practice can lead you to pay for extras you do not need or were not clearly explained. If these add-ons were not properly described or were presented as essential when they were not, you may have grounds for complaint.
Financial and Legal Impact
Being mis-sold a credit product can have serious financial consequences, including unplanned debt, higher costs, and long-term effects on your credit rating. Legally, you are protected under the Consumer Credit Act 1974 and rules set by the Financial Conduct Authority (FCA). These regulations require lenders and brokers to provide clear, honest information and ensure that any products they recommend are suitable for your needs.
If you think you have experienced any of these types of mis-selling, it’s important to understand your rights and the steps you can take. For more detailed guidance, explore our pages on specific types of credit mis-selling and how to make a complaint.
Buy-Now-Pay-Later Misinformation
Buy-Now-Pay-Later (BNPL) schemes allow you to spread the cost of purchases over time, often with the promise of no interest or fees if payments are made on time. However, these offers can sometimes be mis-sold, especially when key terms and risks are not made clear. Common issues include unclear information about late payment charges, the impact on your credit score, or the real cost if you miss a payment. If you were not given all the facts, you might have agreed to a deal that was not suitable for your needs or circumstances.
Being misled by BNPL providers can lead to unexpected debt, extra fees, and long-term financial difficulties. There are rules in place, such as those set out by the Financial Conduct Authority (FCA), that require lenders to treat customers fairly and provide clear, transparent information.
To learn more about your rights and what to do if you think you have been affected, visit our dedicated page on Buy-Now-Pay-Later misinformation for detailed guidance.
“Upsell” of Add-on Products
When taking out credit products, you may be offered extra services like insurance, payment protection, or other add-ons. Sometimes these add-ons are unnecessary, unsuitable, or significantly overpriced. If you were encouraged or pressured to buy such products without a clear explanation of their costs or benefits, this could be considered mis-selling. Not only can these extras increase the total amount you pay, but they may also breach rules set out by the Financial Conduct Authority (FCA), which require firms to treat customers fairly and ensure all products are appropriate and clearly explained.
To find out more about your rights and what to do if you think you’ve been affected, visit our page on mis-sold debt add-ons.
Your Rights if You Were Mis-sold Credit
When you take out a credit product in the UK – such as a loan, credit card, or buy-now-pay-later agreement – you are protected by consumer rights laws. Under regulations like the Consumer Credit Act 1974 and guidance from the Financial Conduct Authority (FCA), lenders must provide clear, accurate information and ensure products are suitable for your needs. If a lender fails to do this, or if you were misled about key terms or charges, this may be considered mis-selling.
How to spot if you’ve been mis-sold credit:
You may have been mis-sold credit if you were not given all the necessary information about interest rates, fees, or repayment terms, or if you were pressured into taking a product that wasn’t right for you. Other warning signs include being sold unnecessary add-on products or not being told about important risks.
Your rights and possible remedies:
If you believe you have been mis-sold a credit product, you have the right to challenge the agreement. This could mean asking for compensation, having unfair charges removed, or even cancelling the agreement in some cases. The Unfair Terms in Consumer Contracts Regulations 1999 protect you from terms that create a significant imbalance between you and the lender. For more on this, see our section on unfair contract terms.
Challenging unfair debt practices:
If you are facing debt collection or being asked to pay charges you believe are unfair due to mis-selling, you can dispute these practices. Start by raising a complaint directly with the lender. If you are not satisfied with their response, you may be able to escalate your complaint to the Financial Ombudsman Service.
If you are dealing with issues around mortgages, similar rights and protections apply. You can learn more about mis-sold mortgage rights and remedies to understand how these principles extend to other financial products.
Understanding your rights is the first step to putting things right if you’ve been mis-sold credit. For more information, see the FCA’s guidance on Unfair Terms in Consumer Contracts Regulations 1999 and explore our related topics for further support.
How to Take Action if You Believe You Were Mis-sold Credit
If you think you have been mis-sold a credit product, it’s important to act quickly and follow a clear process to protect your rights.
1. Gather Evidence and Document Your Case
Start by collecting all relevant documents, such as your credit agreement, any correspondence with the lender, and promotional materials or sales communications. Make notes about what was discussed, what you were told, and why you believe the product was mis-sold. Evidence is key to supporting your claim.
2. Check the Rules and Your Rights
Credit providers in the UK must follow strict rules set out in the FCA Handbook, including the Consumer Credit sourcebook (CONC). These rules require lenders to be clear, fair, and not misleading when selling credit products.
3. Complain Directly to the Lender or Provider
You should first raise your complaint directly with the company that sold you the credit product. Clearly explain why you believe you were mis-sold, and include any evidence you have gathered. For guidance on how to structure your complaint, you can use letter templates for credit issues to help you communicate effectively.
4. What to Expect from the Complaint Process
Lenders are required to handle your complaint fairly and respond, usually within eight weeks. They may offer compensation, a refund, or another resolution. If you’re not satisfied with the outcome, or if the lender does not respond in time, you have the right to complain about unfair debt practices through official channels.
5. Escalate to the Financial Ombudsman Service
If your complaint remains unresolved, you can take your case to the Financial Ombudsman Service. This is a free, independent service that helps settle disputes between consumers and financial businesses.
Taking these steps can help you seek redress if you have been affected by the mis-selling of credit products. For more detailed guidance on each stage, explore our related resources and support tools.
Dealing with Debt and Credit After Mis-selling
Dealing with debt after being mis-sold a credit product can feel overwhelming, but you have important rights and protections. If you’re struggling to manage repayments or facing pressure from creditors, there are steps you can take to regain control.
Managing Debt Linked to Mis-sold Credit
If debt has built up because of a mis-sold loan, credit card, or buy-now-pay-later scheme, start by reviewing your agreements and checking for any unfair terms or charges. It’s important to communicate with your lender, especially if you’re having trouble meeting payments. For practical tips on budgeting and support, see our advice on managing credit card debt.
Your Rights Against Unfair Creditor Behaviour
Creditors and debt collectors must treat you fairly. If you experience persistent calls, threats, or aggressive tactics, this could amount to creditor harassment, which is illegal under the Protection from Harassment Act 1997. This law protects you from repeated or threatening behaviour by creditors or their agents.
Recognising and Responding to Illegal Debt Collection
If a debt collector uses intimidation, misrepresents their authority, or tries to collect money you don’t owe, these may be signs of illegal debt collection. You have the right to challenge such practices and report unlawful conduct.
Unauthorised or Excessive Charges
Being charged fees or interest that weren’t clearly explained, or that seem excessive compared to what you agreed, may be a sign of unauthorised or excessive debt charges. You can dispute these charges and seek a refund if they result from mis-selling.
If Your Debt Has Been Sold
When a lender sells your debt to another company, you still have rights. Learn more about debt purchasing and your rights if you’re contacted by a new creditor after mis-selling.
If you need further guidance, explore our support pages on debt management, creditor harassment, illegal collection, and unauthorised charges for more detailed information and next steps.
Protecting Yourself from Mis-selling and Scams
Protecting yourself from mis-selling and scams starts with knowing what to look out for. Mis-selling often happens when lenders or salespeople don’t fully explain the terms of a credit product, push you into something unsuitable, or leave out important information. Under UK law, lenders must give you clear, honest details about any credit agreement, including interest rates, fees, and your right to cancel under the Consumer Credit Act 1974.
Be wary of high-pressure sales tactics, unexpected add-on products, or being told you’re “guaranteed” to be accepted for credit without proper checks. Always read the small print and ask questions if anything is unclear.
Scams are another risk, especially when it comes to credit offers or debt collection. Watch out for fake lenders, requests for upfront payments, or threats about unpaid debts that you don’t recognise. Before agreeing to any credit, check that the lender is authorised by the Financial Conduct Authority (FCA) and never share personal details with anyone you’re unsure about.
If you’re unsure whether an offer or contact is genuine, our guide on how to spot scams can help you identify the warning signs and avoid falling victim to fraud or unfair practices. Taking these steps can help you stay safe and make informed decisions about credit.
Further Resources and Related Topics
If you’re concerned about mis-selling of credit products, you may also find it helpful to explore related issues that could affect your rights and protections. Understanding the wider context of debt and credit can help you take informed action if you’ve experienced unfair treatment.
For example, you can learn more about unfair debt practices, which covers broader problems such as misleading information or aggressive sales tactics. If your credit agreement has been sold to another company, our guide on debt purchasing and your data explains your rights under UK data protection laws.
If you’re experiencing persistent calls or pressure from lenders, our section on harassment by creditors outlines what counts as harassment and the protections available under the Consumer Credit Act 1974 and FCA guidelines. We also provide information about illegal debt collection, helping you spot and challenge unlawful tactics.
Charges and fees are another common concern. You can read more about unauthorised or excessive debt charges and how to challenge them, as well as unfair contract terms and fees that may be hidden in your agreements.
Exploring these related topics can give you a fuller understanding of your legal rights and the steps you can take to address any problems with credit products or debt.
