01Dec

Lawmakers have asked an advertising watchdog to examine the case for banning payday loan advertisements from being shown on television prior to the 9pm watershed. The House of Lords, which is currently debating the Consumer Rights Bill, has called on the Broadcast Committee of Advertising Practice (BCAP) to look into the matter. BCAP has promised to do so and has said it will report early in 2015; indeed the watchdog had already said back in June 2014 that it would be conducting a general review of payday loan advertising.

BCAP’s Code of Practice includes rule 1.2:

“Advertisements must be prepared with a sense of responsibility to the audience and to society,” and rule 5.9: “Advertisements must neither directly exhort children to buy a product or service nor encourage them to ask their parents, guardians or other persons to buy or enquire about a product or service for them.”

Payday lenders are also subject to the financial promotions rules of the regulator, the Financial Conduct Authority. These rules include:

  • Not stating or implying that credit is available to all applicants regardless of their status and personal circumstances
  • Disclosing the Annual Percentage Rate when the promotion contains other financial information, or provides an incentive to take out credit
  • Including a health warning – ‘Late repayment can cause you serious money problems’ on promotions

Matthew Reed, chief executive of the Children’s Society, said: “Our research shows that children are routinely being exposed to advertising that makes high-risk, high-cost loans seem fun or normal. And the majority of British parents support a pre-watershed ban.

“Children should learn about borrowing and debt from their school and family – not from irresponsible payday loan advertising which encourages families to fall into problem debt.”

There were almost 17,000 responses to the Society’s call for members of the public to lobby House of Lords members over this issue.

Children cannot of course take out payday loans. But the concerns in this area are twofold, firstly that children will pester their parents to take out loans to spend on toys, treats etc; and secondly that the industry is encouraging the next generation to consider borrowing as a normal activity. A poll by consumer finance website Moneysavingexpert.com showed that one in three under 10s had repeated payday loan advertising slogans, and 14% had asked their parents to take out a loan.

Concerned that its promotions may be attractive to children, the UK’s largest lender, Wonga, has ceased to use the elderly ‘puppet’ characters in its advertisements, and has arranged for their name to be removed from children’s Newcastle United replica kits. Yet no other large lender has so far made a similar move.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.