Consumer credit firms have been told by the City regulator that they have a responsibility to ensure they do not exploit the cost-of-living crisis to promote their services.
The Financial Conduct Authority (FCA) said it had seen financial promotions including phrases such as “no credit checks” and “loan guaranteed”.
It said there is no excuse for adverts making borrowing look less risky or easier than it is.
Lenders and brokers who do not stop using misleading terms in their advertising face regulatory action, the FCA warned.
More people may be inclined to take out loans amid the living costs crisis.
But the FCA said marketing that does not give clear information and warnings about the potential consequences of borrowing puts consumers at risk of finding themselves in a worse financial position.
It has written to nearly 28,000 consumer credit firms.
Firms’ adverts should not give consumers the impression that they will automatically get a loan if they apply, or that they can get a loan without the lender checking they can afford it, the regulator said.
The letter says: “Millions of people are facing the biggest cost of living crisis in more than a decade with bills expected to rise considerably.
“We can expect to see greater demand for credit, including short-term credit, particularly impacting consumers in vulnerable circumstances.
“We need to keep the sector under close review to ensure that demand does not result in unsustainable and often unaffordable lending.
“Firms have a responsibility to ensure they do not exploit the cost-of-living crisis to promote their services.
“Firms should focus on their customers’ needs, delivering the right information, at the right time, and in accordance with our rules.”
The FCA said it will continue to monitor online credit advertising to check that firms are complying.
If firms fail to comply, the FCA action could include banning adverts or requiring firms to change or withdraw them – or even removing a firm’s permissions to engage in regulated credit activity.
The FCA’s new three-year strategy includes a focus on driving up standards and making firms put consumers’ needs first.
Sheldon Mills, executive director of consumers and competition at the FCA, said: “The rising cost of living means many more consumers may find themselves in difficulty.
“When people are looking for a loan, it’s vital that they have the full picture about what this might mean and the risks involved – particularly if they are already in a difficult financial situation.
“There is no excuse for adverts to make borrowing look easier or less risky than it is and they should be seeking to help customers through the cost of living crisis – not exploiting it in their marketing.”
People who are struggling financially can get free help from the UK-backed MoneyHelper guidance service.
Charities such as StepChange, Citizens Advice, the Money Advice Trust and Christians Against Poverty can also offer support.
Rocio Concha, Which? director of policy and advocacy, said: “The FCA should not hesitate to take action if firms fail to heed these warnings and continue to exploit the cost-of-living crisis to promote their products.”