A report out today from the Business Innovation and Skills select committee warns that consumers are particularly likely to use payday loans and the high rates charged by lenders during Christmas time, as budgets are stretched to the limits. MPs on the committee have called on lenders to stop advertising during children’s television shows to prevent the normalisation of this type of financial product.
Chair of the committee Adrian Bailey MP said: “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.” He added that the sector is in “urgent need of overhaul” and tighter regulation, especially around affordability checks and rollovers. MPs also called for health warnings to be shown when people take out loans online to make sure they understand the amount they will have to repay.
A spokesman for Wonga, one of the most prominent payday lenders, said they had cooperated closely with MPs during the reporting process, but added: “On advertising, which is something we weren’t asked about during our participation, the idea that Wonga advertises on children’s TV channels or programmes is a myth. We have a strict, long-standing policy not to advertise in this way.”
Stella Creasy MP said: “The 2,235 per cent increase in adverts for payday loans flooding our airwaves over the last few years is an increase as astronomical as their interest rates. That the evidence also shows how many under 16s have been subject to these adverts and that half of these adverts were shown during daytime hours also highlights they can’t be trusted when they say they don't target children.”