A group of MPs are calling for greater restrictions on payday loan firms’ advertising strategies, after a report by the Citizens Advice Bureau revealed they were targeting children and teenagers by showing ads on channels popular among youngsters.
Research by the advertising watchdog Ofcom backed up these claims, and MPs on the business select committee are calling for an outright ban on payday lenders advertising on children’s TV.
Such firms have been in the firing line of MPs, campaign groups and charities across the UK this year, after cases suggested high-interest loans were being granted to those who couldn’t afford repayments. They were also accused of harassment and of luring people into debt spirals.
When appearing before the committee to give evidence to MPs, Martin Lewis from MoneySavingExpert.com accused payday loan firms of “grooming” people by using “inappropriate propaganda” to persuade them to take out payday loans.
Chair of the committee Adrian Bailey MP said, “The Money Advice Service suggests that 1.2 million people plan to take out payday loans to cover the cost of Christmas. The evidence we heard suggests they should think very carefully before doing so. Inadequate affordability checks, unacceptable targeting and inappropriate use of rollovers all are symptoms of a payday loans sector in urgent need of overhaul.”
He added that the expansion of the sector accompanied with an increase in those experiencing debt problems meant that more people are “increasingly at risk from payday loans”.
“The number of payday loan adverts seen by 4-15 year olds has increased from 3 million in 2008 to 596 million in 2012. This means that last year the average child was exposed to 70 payday loan adverts”, Bailey said.
“It is worrying that our children are being exposed to such an extent to adverts that can present payday loans as a fun, easy and appropriate way to access finance. Children’s programs are simply not an acceptable place for payday loan adverts.”
One payday lender, First Financial, was also fined £175,000 by the Information Commissioner’s Office (ICO) this week over text messages that it sent to people claiming to be from friends. One text read: “Hi Mate hows u? I’m still out in town, just got £850 from these guys www.firstpaydayloanuk.co.uk.”
ICO director of operations, Simon Entwisle, said, “We will continue to target these companies that continue to blight the daily lives of people across the UK. We are also currently speaking with the government to get the legal bar lowered, allowing us to take action at a much earlier stage.”