The proposed clampdown on payday loan firms’ advertising could stretch to an outright ban – which cigarette brands have been subject to for over a decade – following a Whitehall summit.
The boss of the new watchdog, the Financial Conduct Authority, which takes over regulation of the loans market next April, said a ban was just one of the proposals on the table.
Martin Wheatley was speaking following a summit of lenders, regulators, charities and ministers intended to address deep-rooted problems in the industry.
“If payday loan companies are genuinely targeting a particular income bracket- people with jobs – why do they advertise on daytime television,” he told the BBC. “It’s clear the industry must not wait for new rules to come in and must clean up its act without delay.”
Payday lenders have faced fierce criticism virtually since the market launched five years ago, amid accusations they target to people who cannot afford to repay their debts.
The Government had already proposed a raft of advertising restrictions, in March, with talks between the Advertising Standards Authority, Consumer Minister Jo Swinson and Treasury Minister Sajid Javid to discuss greater responsibility in advertising.
Javid said the takeover by the FCA would mark a step change in the regulation of the industry. He added: “They now have to deal with a regulator with some real teeth. They are going to feel the hand of the regulator on their shoulder and they better get used to it.
“If there is any evidence of irresponsible lending, bad practice or rogue lenders, the regulators have a very important power independently to intervene in that market and to change the rules.”
At the end of May, the OFT came under fire from a Parliamentary Committee, which accused the regulator of being “ineffective and timid in the extreme” in dealing with payday lenders.
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