Payday lending advertising faces ban under hard-hitting new rules

 

Payday lending advertising could be banned under hard-hitting new rules being considered by the new City Watchdog.

The high-cost credit industry is also facing a crackdown on the number of times they can rollover loans and may be forced to introduce time-lags on loans, so borrowers don't end up choosing a lender on the basis of how quickly it can get at the cash.

The details emerged from a Westminster summit called yesterday by senior Ministers.

They summoned leading payday firms, including Wonga, Dollar Financial and The Cash Shop, to explain why the high-cost credit industry is failing to meet minimum regulatory requirements.

At the summit - which also included debt charities and consumer organisations - Ministers were told of far-reaching proposals that could ban daytime adverts on television that target the unwaged and vulnerable people.

Martin Wheatley, head of the Financial Conduct Authority, didn't rule out a blanket ban on lenders, similar to ones already in place on tobacco and gambling.

"That's a power which will be available to us," he said after the summit.

Delroy Corinaldi of debt charity Step Change called for all payday loan advertising to carry a health warning that includes information about the risks of using high-cost credit. “In particular, companies must be clear that loans need to be realistic and affordable and are not a way to deal with long-term financial problems,” he said.

Citizens Advice’s Gillian Guy added: “I am particularly keen to see new action on advertising. Payday lenders need to be clear about who they are targeting. We see daytime television adverts with glamorous celebrity endorsements targeted at the unemployed and those on low incomes.”

Russell Hamblin-Boone of the Consumer Finance Association, which represents the major short-term lenders, conceded: “There are some things we can look at, such as additional measures on advertising and marketing.”

The FCA also announced at the summit that a consultation will be launched in September to decide its approach to controlling payday lenders when it takes over responsibility for them from the Office of Fair Trading in April.

Consumer Minister Jo Swinson, who hosted the summit, said there is a need to control the number of loans desperate borrowers are allowed to take out, with one borrower reportedly having 34 different loans at the same time.

"There a real issue around people being able to take out multiple loans," she said.

She intimated that lenders could be forced to set up a central register of borrowers to cut the practice of multiple loans.

Economic Secretary Sajid Javid added: "The Government is serious about making sure there is no irresponsible lending. We’ve shown the payday lenders we will have a regulator with real teeth."

Which? executive director, Richard Lloyd said: "Positive noises about tough new rules have come out of the summit but these must now be backed up with more concrete actions than we've seen today.”

Yesterday Wonga chief Errol Damelin claimed: “We de-stress lives.” Speaking at a conference in London’s Docklands the multi-millionaire said the online lender’s success is down to it sticking to three principles of transparency, flexibility - giving customers what they want - and being selective.

The firm has always denied accusations of irresponsible lending.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test
Tour de France 2015: Twins Simon and Adam Yates have a mountain to climb during Tour of duty

Twins have a mountain to climb during Tour of duty

Yates brothers will target the steepest sections in bid to win a stage in France
John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
Forget little green men - aliens will look like humans, says Cambridge University evolution expert

Forget little green men

Leading evolutionary biologist says aliens will look like humans
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy