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MPs say: Ban Payday Loan Adverts on Children’s TV
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Following on from the evidence session held on the 5th November 2013 which included Martin Lewis of MoneySaving Expert amongst its witnesses - the Business, Innovation and Skills Select Committee have today published their report into Pay-day Loan Companies.
The Committee questioned representatives of payday loan companies, the regulatory and consumer advice bodies, as well as the Financial Conduct Authority who take over as the new regulator for consumer credit, in April 2014.
The report is available in full at http://www.publications.parliament.uk/pa/cm201314/cmselect/cmbis/789/789.pdf
Key Conclusions:
The Business, Innovation and Skills Committee welcomes the increased focus, from across the political spectrum, on the payday loan sector. The Report states that further action is needed, however, to protect consumers.
Recent research by Ofcom shows that payday loan advertising is prevalent on children’s television. The Committee calls for such adverts to be banned from all children’sprogrammes.
Adrian Bailey MP, Chair of the Business, Innovation and Skills Committee, 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 inurgent need of overhaul.
“The rapid expansion of the payday loan sector has been accompanied by a significant increase in the number of people experiencing serious debt problems. The two are not unrelated. It is clear that consumers are increasingly at risk from payday loans.
Adverts on Children’s TV:
“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. 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.”
Continuous Payment Authority (CPA):
“Not getting notice of money being taken out of your bank account is a serious problem if you are living ‘hand-to-mouth’. People need to have advance warning of when money is taken, and to be made aware of their right to cancel a continuous payment authority."
Nuisance Calls & Texts:
“Vulnerable people at their lowest ebb should not be bombarded by texts and telephone calls offering high cost loans. But this is what anecdotal evidence suggests is happening. The FCA must work to build an evidence base of who is driving the market and who is being targeted. If inappropriate targeting is happening, all brokering of payday loans through email and text should be banned.
“The FCA should highlight that nuisance text messages can be reported by forwarding them to the dedicated ‘7726’ “shortcode” number.”
What do you think about the Committee’s Recommendations?
How to watch:
The video of the evidence session is still available to view for those who are interested and is accessible
at: http://www.parliamentlive.tv/Main/Player.aspx?meetingId=14115
Please note Windows Media Player or Silverlight are required to stream Parliament TV
The transcript of the evidence session is available to read at: http://data.parliament.uk/writtenevidence/WrittenEvidence.svc/EvidenceHtml/4048
About the Business, Innovation and Skills Select Committee:
For further information about the work of the Business Innovation and Skills Select Committee go to the website at: http://www.parliament.uk/bis/
The Committee questioned representatives of payday loan companies, the regulatory and consumer advice bodies, as well as the Financial Conduct Authority who take over as the new regulator for consumer credit, in April 2014.
The report is available in full at http://www.publications.parliament.uk/pa/cm201314/cmselect/cmbis/789/789.pdf
Key Conclusions:
The Business, Innovation and Skills Committee welcomes the increased focus, from across the political spectrum, on the payday loan sector. The Report states that further action is needed, however, to protect consumers.
Recent research by Ofcom shows that payday loan advertising is prevalent on children’s television. The Committee calls for such adverts to be banned from all children’sprogrammes.
Adrian Bailey MP, Chair of the Business, Innovation and Skills Committee, 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 inurgent need of overhaul.
“The rapid expansion of the payday loan sector has been accompanied by a significant increase in the number of people experiencing serious debt problems. The two are not unrelated. It is clear that consumers are increasingly at risk from payday loans.
Adverts on Children’s TV:
“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. 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.”
Continuous Payment Authority (CPA):
“Not getting notice of money being taken out of your bank account is a serious problem if you are living ‘hand-to-mouth’. People need to have advance warning of when money is taken, and to be made aware of their right to cancel a continuous payment authority."
Nuisance Calls & Texts:
“Vulnerable people at their lowest ebb should not be bombarded by texts and telephone calls offering high cost loans. But this is what anecdotal evidence suggests is happening. The FCA must work to build an evidence base of who is driving the market and who is being targeted. If inappropriate targeting is happening, all brokering of payday loans through email and text should be banned.
“The FCA should highlight that nuisance text messages can be reported by forwarding them to the dedicated ‘7726’ “shortcode” number.”
What do you think about the Committee’s Recommendations?
How to watch:
The video of the evidence session is still available to view for those who are interested and is accessible
at: http://www.parliamentlive.tv/Main/Player.aspx?meetingId=14115
Please note Windows Media Player or Silverlight are required to stream Parliament TV
The transcript of the evidence session is available to read at: http://data.parliament.uk/writtenevidence/WrittenEvidence.svc/EvidenceHtml/4048
About the Business, Innovation and Skills Select Committee:
For further information about the work of the Business Innovation and Skills Select Committee go to the website at: http://www.parliament.uk/bis/
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I’m the official organisation rep for the House of Commons. I do not work for or represent the government. I am politically impartial and cannot comment on government policy. Find out more in DOT's Mission Statement.
MSE has given permission for me to post letting you know about relevant and useful info. You can see my name on the organisations with permission to post list. If you believe I've broken the Forum Rules please report it to [email protected]. This does NOT imply any form of approval of my organisation by MSE
I’m the official organisation rep for the House of Commons. I do not work for or represent the government. I am politically impartial and cannot comment on government policy. Find out more in DOT's Mission Statement.
MSE has given permission for me to post letting you know about relevant and useful info. You can see my name on the organisations with permission to post list. If you believe I've broken the Forum Rules please report it to [email protected]. This does NOT imply any form of approval of my organisation by MSE
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Replies
Payday loans should not be subject to an "APR" as they are designed to be repaid within a maximum period of 31 days.
Instead any Payday loan offer should state the amount borrowed plus any fees+charges, and the total amount payable on the borrowers payday.
If you want to ban PDLs, then we should also ban overdrafts and credit cards, as these are effectively the same things!! (Only much cheaper and generally only available to people who actually have a payday LOL)
As usual, our glorious political leaders of all parties show that they're still hard of thinking. The issue with TV advertising is not whether or not these adverts are appearing on kids TV but whether or not they are shown during the day at all, when kids might be watching any TV channel that's broadcasting.
MPs back MSE's call to ban payday loan ads from kids' TV
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I watched the discussions as they happened and it was interesting to see the PDL chaps squirming a bit and found it interesting to hear them say categorically that somethings don't happen which (I know from experience) do.
I do think that there is a place for these companies but they should;
A) Not be advertised at all on TV
C) Should only be available for those in employment
D) Be a maximum of 20% of the proven income
E) No roll over option
F) Not provide incentives for referring a friend"
G) Work with their customer to negotiate on a repayment plan without having to have the payment fail in the first place
It would also be nice to get the person working ad the PDL to ask if the loan is really needed and challenge anything frivolous like "I need a night out" and almost try to talk the person out of it but I can't see that happening
MB
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