The OFT will launch plans to curb how payday loans firms advertise their products including proposed limits on the frequency and timing of ads plus more explicit instructions on how clearly they state their annual percentage rate (APR).
Reports claim the OFT is understood to be in talks with advertising regulator the Advertising Standards Authority (ASA) to ensure compliance with any future regulations, or ‘wealth warnings’ as they are being called in reports.
The move forms part of a wider Government crackdown on the sector which includes prominent advertisers, such as Wonga, QuickQuid and Payday UK. Government figures estimate the sector to be worth approximately £1bn a year, although other reports put it as high as £2bn, having “ballooned” since the financial downturn took hold in 2008.
An interim report on the sector published by the OFT in November raised concerns over a number of practices in the sector after a “sweep” of 50 payday lenders’ sites.
In the report, David Fisher, OFT director of consumer credit, said: “We have uncovered evidence that some payday lenders are acting in ways that are so serious that we have already opened formal investigations against them.
“It is also clear that, across the sector, lenders need to improve their business practices or risk enforcement action.”