Payday loan firms such as Wonga and QuickQuid are to face tougher marketing rules as part of a Government clampdown to prevent firms in the £2bn industry from exploiting consumers in financial straits.
One of the fastest growing financial services industries in recent years, some businesses charge an APR interest rate of as much as 3,000%, and have faced widespread criticism from consumer groups and MPs.
New measures will include a limit on the number of TV ads they can place in an hour and the times they can advertise. They will also be forced to ensure their annual interest rates are properly displayed.
The Government is to hand the new financial watchdog, the Financial Conduct Authority, powers to enforce the rules which will come into effect in April next year.
Advertising restrictions, to be discussed with the Advertising Standards Authority, will be spearheaded by Consumer Minister Jo Swinson and Treasury Minister Sajid Javid. Swinson is to hold an industry summit to discuss greater responsibility in its advertising.
The Office of Fair Trading is also due to publish the findings of its year-long inquiry into the sector, and is expected to expose widespread malpractice across the industry.
The review has involved on-site inspections of 50 major payday lenders and surveys of industry and consumer organisations. Leading up to the review, the OFT conducted a sweep of over 50 payday lending websites and wrote to the main trade bodies outlining areas where it considered advertising standards need to be improved.
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