MPs and Payday Loans clash over advertising rights

A panel of MPís have urged the administration to place a ban on Payday Loan adverts on kids television, arguing that they are currently exposing young people to the notion that loans are ëfun, easy and an appropriate way to access financeí.
The Business Select Committee devised a number of other reforms for the industry as well, as it looks to heat up its bid to decrease the prominence of Payday firms.
However, market leader Wonga has identified the Committeeís remarks as being untrue, citing that it is a ëmythí that they actually advertise during kids TV programmes.
ëSensible stepí
Despite Wongaís comments, data from finance regulator Ofcom indicated that there has been a sharp rise in the number of Payday loan adverts on television in the past 4 years, with children between 4 and 15 now seeing over 500 million more adverts than they did in 2008.
Five years ago, official figures estimated the total number of payday loan adverts on TV to be just three million for the year. However, last year, this was gauged to have increased to an outrageously high 596 million, comprising 0.7% of the total adverts children saw across the year.
The reality of this is that it implies that the average kid between four and fifteen witnessed at least 70 payday loan advertisements in the last year.
Despite this, statistics suggest that only 3% of these adverts seen by children were found on kids TV, meaning only two per child were seen on these forums. 
The topic of payday loan borrowing has dominated political discussion in recent times, with government officials, financial bodies and UK campaigners alike all calling for huge reforms to be made to make them ësaferí for borrowers. 
Both the opposition leader, Ed Miliband, and the Citizens Advice Bureau have urged the administration to implement a ban on payday adverts on kids television, though as of yet no action has been taken to ensure this. 
“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.”
The Advertising Standards Authority, who are tasked on regulating the adverts aired on TV, have argued that they are currently trying their best to remove any adverts they deem to be ëirresponsibleí, though they warned that campaigners would have to secure government legislation if they wished to bring a permanent ban to adverts on childrenís television. 
Russell Hamblin-Boone, the chief of the Consumer Finance Association, defended payday loan firms actions, arguing that it was a fallacy that they appeared on childrenís TV. 
Mr Hamblin-Boone said: “The CFA recognised concerns around the advertising of short-term loans on children’s TV channels over a year ago and as a result, there have been no adverts by members on children’s channels since then.”
He also pointed out that witnessing an advert didnít mean that young people would have their loan application accepted, with most people needing to be in employment and over the age of 18 in order to acquire one. 
He added that viewing an advert did not equate to having a successful application for a loan, which was available primarily to over-18s in work.
Reforms
As well as calling for an end to payday loan adverts on childrenís TV, the Business Select Committee called for a number of other reforms to be instigated in order to clean up the payday industry and make it a less easy platform for people to spiral into debt.
Payday loans are short term, high APR loans that allow people with poor credit ratings to acquire finance at a high cost. 
In the past few years the industry has expanded immensely, with a £ 1 billion rise estimated between 2008 and 2012. 
Some of the reforms that were suggested were the implementation of affordability checks so that only reliable debtors could obtain a payday loan, a one rollover policy and a government levy to be charged to payday firms that would be redistributed into financial advice services. 
“If a customer misses a loan repayment, it is evidence that they are in financial difficulty and that the lending is unsustainable. It is not, as some payday loan companies seem to think, reason for offering a rollover,” said Adrian Bailey, who chairs the committee.
Payday firms have defended their conduct, arguing that there was no difference in the principles behind rolling over loans to those makes minimum repayments on their credit card balances each month. 
But some lenders suggest that rolling over a loan, for example, for another month was similar to paying the minimum repayment on a credit card demand.
“We do not accept the premise of assuming a customer that wishes to roll over their loan more than once is in financial difficulty to the point of vulnerability,” said Mr Hamblin-Boone of the CFA.

The MP report will be reviewed in the upcoming weeks, though any ban of Payday loan advertising may be a lengthy process, considering the legislation required in order to achieve the goal.

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