Payday loans firms Pounds to Pocket has run into trouble with the ad watchdog after an ad promoting its “fast and simple” application process was branded socially irresponsible.
The TV ad, which promised £2,000 loans in just ten minutes with an APR of 278%, told viewers: “No paperwork. No guarantor… No surprises or hidden fees, just fixed payments over 12 months.”
It also featured an individual saying: “I was turned down by the mainstream lenders. I wish I’d gone to Pounds to Pocket first, as their application was fast and simple.”
The Advertising Standards Authority slammed the ad on a number of issues. It considered the claim “I wish I’d gone to Pounds to Pocket first” carried the implication that Pounds to Pocket could be a first point of call for a prospective borrower, which it considered to be socially irresponsible.
The regulator also criticised the way the ad indicated that credit was available to people who might otherwise not get it. And, because the ad could have misled vulnerable consumers who were in financial difficulty, the ASA concluded it was misleading and socially irresponsible.
It ruled the ad must not be broadcast again in its current form.
The ruling is likely to increase pressure on firms offering payday loans, which have already been branded “legal loan sharks” by Labour MP Stella Creasy.
The Office of Fair Trading recently said that most of the 50 big firms it has been inspecting do not operate fully by its rules. It has now begun formal investigations into several payday lenders over aggressive debt collection practices.
The OFT will publish a full report into the £1bn market in the next few weeks.
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