The majority of Britons support a ban on all advertisements by payday loan companies, new figures released on Thursday suggest.
Payday loans firms have been criticised by consumer groups such as Citizens Advice in recent weeks over their “immoral” advertising campaigns, which allegedly target TV stations popular among children and teenagers, such as music channels.
MPs on the business select committee called in December for greater restrictions on the industry’s advertising rights. Committee chair Adrian Bailey MP said children’s TV was an unacceptable place for the adverts to air.
Now, there have been renewed calls for a greater clampdown on payday loan advertising, after a poll by Channel 5 and YouGov suggested some 70% of the Britons were completely against all advertising.
Payday lenders, which charge high interest rates, were the centre of many political debates in 2013, with bosses hauled before MPs to explain their “irresponsible practices”. This included insufficient background checks on customers, some of whom were unable to repay the loans, and excessive charges.
Gillian Guy, chief executive of Citizens Advice said, “It is utterly irresponsible for payday lenders to target children and people out of work with adverts that mask the difficulties payday loans can cause.”
“The industry claims it only lends to people who can afford to repay loans, but Citizens Advice figures highlight that 61% of loans come without proper checks and three in four people struggle to pay back loans”.
Guy suggested that banks could open up a new “micro-loan” market in order to increase competition within the consumer credit industry.
She added, “In order to protect consumers, the payday loan industry needs to behave fairly and responsibly, and compete on price instead of speed of loans. A ban on advertising to children and people without a job would stop payday loans appearing as the norm and could stem the tide of people on limited incomes struggling with mountainous debt caused by payday loans.”