The Broadcast Committee of Advertising Practice (BCAP), which writes advertising codes of practice that are used in adjudications by the Advertising Standards Authority (ASA), published new guidance on payday loan advertising in early June 2015. This guidance came into effect immediately, so all payday lenders and brokers that market themselves via broadcast media should take note of it, even though it does not specifically introduce any new rules, nor does it bind the ASA in any way regarding future adjudications on payday loan advertising.
The guidance focuses around the issue of trivialisation – advertising that fails to reflect the serious nature of borrowing money and taking on an obligation to repay the loan within a specified timeframe. Firms need to think carefully before using any form of cartoon, jingle or humorous song in their adverts.
BCAP’s guidance also makes it clear that it is inappropriate to suggest that a payday loan is suitable to supplement regular expenditure, to address long-term financial difficulties or to fund luxury or discretionary spending. Regarding the last of these, the guidance lists holidays, weekends away, shopping, restaurant meals and socialising as inappropriate reasons for encouraging consumers to take out payday loans.
Instead, it strongly suggests that the most likely reason someone would need a payday loan would be to meet an unexpected, one-off bill, such as expenditure relating to domestic maintenance and repairs. “It helped out as my boiler was broken and I was two weeks away from pay day” is one of the phrases BCAP suggests firms could use in their advertising.
Adverts should also not place undue emphasis on the speed with which a loan can be provided, or on how easy the application process is. The guidance warns against using phrases such as “It’s fast, easy, and there’s never a credit check”, and “Money within 24 hours of valuation.” Instead, it suggests using phrases such as “Loans are subject to status and affordability.”
Finally, the guidance warns firms not to encourage consumers to disregard the representative APR (RAPR), which is always a high figure with payday loans.
BCAP also intends to commence a consultation, prior to the end of July 2015, regarding the times at which payday loan TV advertisements are scheduled. However, its recent review of TV advertising did not find substantial evidence to suggest that adverts are targeting children and encouraging them to ask parents to take out loans. Nevertheless, the BCAP press release reminds firms that they cannot broadcast any material that might encourage children to act in this way. Firms are also asked to think carefully about when adverts are shown. Many industry commentators, as well as the House of Commons Business, Innovation and Skills Committee, have suggested that the law should be changed to prevent payday loan advertising being shown prior to the 9pm watershed.
The ASA has previously banned a number of payday loan adverts that: suggested loans were suitable for supplementing regular expenditure, suggested they could be used for luxury spending, encouraged consumers to disregard the RAPR, or used inappropriately light-hearted content.
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.