Government rejects calls for payday loan daytime TV ad ban

The Government has rejected calls from an influential group of MPs for a ban on payday loan adverts appearing on children’s and daytime TV.

wonga-2013-460
Payday lenders escape daytime and children’s TV ad ban, but will need to display clearer warnings and signposting to debt advice in their marketing.

The Business, Innovations and Skills Select Committee made the recommendation in December following research that found children were exposed to 596 million payday loan ads in 2012, an average of 70 per child, and a 21.8 per cent increase on the previous year.

The Select Committee was also concerned payday advertising does not make fully clear to borrowers that their credit ratings could be adversely impacted if they do not pay back their loans.

But in a response to the Select Committee yesterday (25 March), the Government said the payday lending sector was already subject to the Advertising Standards Authority’s “strict content rules” and that a ban was not necessary.

The response continues: “The increase reported by Ofcom in the number of payday lending ads seen by children is concerning, but it is also important to note that they comprise a relatively small 0.6% of TV ads seen by children aged 4-15.”

The Financial Conduct Authority recently consulted on new rules for consumer credit adverts, which include proposals to introduce mandatory risk warnings and signposting to debt advice. 

In light of that feedback the FCA has recommended that the current warnings should be “shorter and sharper” and should now read: “Warning: Late repayment can cause you serious money problems. For help, go to www.moneyadviceservice.org.uk”.

The FCA says it will monitor digital, broadcast and print financial promotions from 1 April – when it takes over the regulation of payday lending – to ensure they comply with its rules. For repeat breaches, the regulator says it may also require the firm to provide it with a signed statement stating that they have effective governance in in place for the approval of compliant marketing – with enforcement action possible in the “worst case scenario”.

The regulator also said that it is not best placed to ban advertising on children’s or daytime television, adding that any ban would need to comply with Article 10 of the European Convention on Human Rights, which sets out the right to the freedom of expression.

Adrian Bailey, who chaired the Select Committee, told the BBC the Government and FCA response was “very weak”.

He added: “We welcome the acknowledgement of the problems that can be caused by payday loans, but there does not seem to be the drive to take the necessary measures that will make an impact on the issue.”

Separately, The Broadcast Committee of Advertising Practice, the body that writes the broadcast advertising code, is currently considering the extent to which payday loan advertising features on children’s TV and whether there are any implications for the ASA’s regulation of the sector.

Latest from Marketing Week

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3703 or email customerservices@marketingweek.com

If you are looking for our Jobs site, please click here