A committee of MPs is demanding that payday loan firms are banned from advertising on children’s television, even though Wonga claims it is a “myth” that its commercials target kids.
The Business Select Committee started its investigation last month, and its final report said ads could expose children to the idea that loans were “fun, easy and an appropriate way to access finance”.
The report follows figures from regulator Ofcom, which showed that children aged 4 to 15 saw 3 million payday loan TV ads in 2008, but this had grown to 596 million in 2012, accounting for 0.7% of ads seen by this age group.
This meant that the average child aged 4 to 15 saw 70 payday loan commercials last year. Yet only 3% of payday loan ads seen by this group were on children’s channels, equivalent to 2 per child on these channels over the year.
Citizens Advice and Labour leader Ed Miliband have already called for a ban on ads on children’s TV.
“Targeting children and people out of work with payday loan adverts is immoral,” said Citizens Advice chief executive Gillian Guy.”A ban on advertising during children’s TV programmes is a sensible step, but further restrictions around ads aimed at people on very low incomes are also necessary.”
However, the Advertising Association has consistently backed payday loan firms’ right to advertise. In the summer chief executive Tim Lefroy said: “Payday loans have no shortage of critics, but their advertising is covered by two highly competent, well-respected national regulators. It is the ASA and OFT which are best placed to determine whether further attention is required.
In a wide-ranging report, the committee said the sector was “in urgent need of an overhaul”. Among the recommendations are prominent “health warnings” at every stage of the application process, a restriction to only one rollover per payday loan, and the introduction of a data-sharing system to prevent people taking out multiple loans from numerous providers.
Payday chiefs defiant in MP probe
New payday loan rules but no ad ban
Payday ad ban to cost industry £36m
Ad body blasts payday loans ban
‘God’ takes on payday loans
Cash Lady axes bankrupt Catona
Payday firms face outright ad ban
Katona back in new Cash Lady ad
Cash Lady ‘easy money’ ad slated
Payday loans ‘piling on agony’
Call for realtime credit database
Payday firms face ad clampdown
ASA blasts Pounds to Pocket ad
Wonga targets online shoppers
Payday loan firms face OFT probe