Wonga ad banned for not stating interest rate
Beleaguered payday lender Wonga has been dealt another blow after one of its TV ads was banned for failing to mention the interest rate charged.
The ad showed a worried looking man sat in a restaurant writing numbers on a napkin before one of the animated characters often used in the payday lender’s ads appeared and said: “You appear to be in a financial quandary, young fellow. At Wonga you choose how much you borrow and for how long…. You can pay back and early and save money”.
Citizens Advice took issue with the final statement was an incentive and Wonga was therefore required to display the Representative Annual Percentage Rate (RAPR) of interest.
The Advertising Standards Authority agreed stating in its ruling that the “save money” claim was a comparison against other lenders and was therefore required by the Committee of Advertising Practice codes to display the rate.
The watchdog also concluded it was in breach of the Consumer Credit (Advertisements) Regulations 2010 as it ran before 1 April and therefore before those rules were replaced when the Financial Conduct Authority took on the regulation of the consumer credit market.
Wonga argued the claim was not a “comparative trigger” as there was no indication in the ad “that the ability to repay early and save money was more favourable than any other lender”.
It is the second of Wonga’s ad to be banned in 2014. A campaign that attempted to debunk what Wonga claimed were myths about its loans was rapped for implying its high interest rates were “irrelevant” in April.
Wonga’s new chairman Andy Haste last week attempted to draw a line under a tumultuous few years for the firm, which has seen it come under fire from MPs, charities and even the Archbishop of Canterbury for its 5000+ interest rates.
The firm has written off £220m worth of debt from more than 300,000 customers after new affordability checks were introduced. Haste recently told The Independent that it was prepared to make less profit in the hope of “repairing our reputation and regaining our right to be an accepted part of the financial sector”.
Haste also mooted a possible rebrand although it is not clear if that means a name change or new visual identity. The brand, which has not run TV ads since June, is also rethinking its ad strategy in hope of “making sure we don’t leave any impression that we’re trying to influence or target the very young or the vulnerable”, Haste said in a video statement in July.
