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Payday loan adverts could be banned on television before 9pm …

Payday loan commercials could be banned from TV before the 9pm watershed, under proposals being considered by the UK advertising regulator.

The Broadcast Committee of Advertising Practice (Bcap), the body responsible for writing the rules for TV ads, is already looking at the content of payday loan commercials.

The government has now asked Bcap to extend the scope of its review to look at the scheduling of payday loans ads and a potential pre-watershed ban.

This extension of the investigation was revealed by Baroness Jolly, a Liberal Democrat peer, in a session in the Lords discussing the report stage of the consumer rights bill on Wednesday.

“Treasury ministers have asked Bcap to broaden the remit of its review to ensure that it also considers the appropriateness of its scheduling rules, as well as those around content,” she said. “Treasury ministers are writing to Bcap formally to set out this request. Bcap has agreed to this and will expand its review with a view to publication of its findings, in full, in the new year.”

The extension of the review will push back publication deadline of Bcap’s investigation into payday loan ads, which began in June and was due imminently.

The Advertising Standards Authority said it has banned 25 payday loan ads since April 2013.

The existing advertising code already prohibits payday loan ads from encouraging under 18s to either take out a loan or pester others to do so for them. The rules also require that ads must be socially responsible.

According to research by the media regulator Ofcom children on average see around 1.3 payday loan ads on television per week, out of around 17 hours of weekly TV viewing.

Payday loans ads comprised a relatively small 0.6% of TV ads seen by children aged four to fifteen, according to Ofcom.

The Consumer Finance Association, which represents payday lenders making up 60% of the multibillion pound a year UK industry, and Wonga have explicit policies not to advertise on children’s TV.

“We are pleased to see the government recognise that this is a problem,” said Joanna Elson, chief executive of the Money Advice Trust, the charity that runs the National Debtline.

“On the debt advice frontline we have become increasingly concerned that high cost credit is in danger of becoming normalised amongst young people. Restrictions on payday loan advertising before the watershed, on the same basis as those already in place for gambling and alcohol, would be a very welcome step.”

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[…]

Wonga Ad Banned From TV For Not Showing Cost Of Borrowing

An ad for payday lender Wonga has been banned for breaching regulations by failing to disclose the relevant cost of borrowing. The television ad showed a man anxiously jotting down figures on a napkin before looking at his phone calculator and seeing the amount of £153.79.

An elderly lady than said: “You appear to be in a financial quandary, young fellow. At Wonga you choose exactly how much to borrow and for how long,” and then adding: “You can even pay back early and save money.”

The Citizens Advice Bureau complained that the ad breached regulations by omitting the representative annual percentage rate (RAPR), as it understood that the claim “you can even pay back early and save money” was an incentive likely to trigger the requirement to disclose it.

Wonga accepted that an incentive to apply for credit was a trigger for disclosure of RAPR, but believed the phrase “you can even pay back early and save money” did not fit the criteria. It said the ability to repay a loan before it was due was a standard feature of many products, and that describing that feature in a way that it regarded as brief and factual did not amount to an incentive for the purposes of regulations.

But the Advertising Standards Authority (ASA) noted that the ad said consumers could “save money” with a Wonga loan because they would pay less if they repaid early.

The ASA said: “We acknowledged Wonga’s assertion that this was a factual statement of a feature of their service, but considered that the inclusion of the phrase ‘save money’ was surplus to a purely descriptive statement and offered a discount relative to the headline cost of borrowing a sum for the loan period originally requested.

“We considered that this was an incentive to apply for credit, and that the RAPR should therefore have been disclosed.” It ruled that the ad must not appear again in its current form, adding: “We told Wonga to ensure that future ads that included a comparison or incentive displayed the RAPR.”

Last week Wonga announced it had written off £220 million of debt belonging to 330,000 customers after admitting making loans to people who could not afford to repay them.

Citizens Advice said the ad was one of five payday loan adverts that had been banned after the charity reported them to the ASA. Others were from Peachy, Loan Monarch, Spends4u and Pounds To Pocket – all banned in July.

Citizens Advice chief executive Gillian Guy said: “Payday loan adverts that break the rules should be taken off the air. Adverts must be clear about what taking out a loan means and how much it will cost. The consequences are really serious when payday lending goes wrong. High interest rates and fees can mean that a small loan balloons into a huge debt.

“The ASA is right to take these steps to ban ads that are not up to scratch. With five out of the seven adverts we reported to the ASA now banned, both the advertising and payday loan industries need to look at why so many adverts are not meeting the grade and change their ways. Anyone concerned about the content of a payday advert can report it to Citizens Advice or the ASA directly.”

[…]

Somerset parents want payday loan advert ban


Somerset parents want payday loan advert ban

Somerset parents want payday loan advert ban

First published in News

MORE than three-quarters of parents in Somerset want payday loan companies banned from broadcasting TV and radio adverts to children.

A YouGov survey commissioned by The Children’s Society found 77% of parents want a ban on adverts airing before the 9pm watershed.

Payday loan companies provide shortterm cash advances at annual interest rates which can exceed 6,000%.

A YouGov survey of children aged 13 to 17 found almost three-quarters (72%) had seen or heard an advert for payday loans in the past seven days.

One-third of children found payday loan adverts fun, tempting or exciting, and this group were significantly more likely to say they would consider using a payday loan in the future.

Meanwhile, one-third of parents believed payday lenders’ adverts deliberately target children with more than one-quarter thinking the companies put pressure on children to pester their parents to borrow money.

It follows research by Ofcom last December which showed the number of payday loan adverts on TV had risen by more than 20 times over the past four years with more than half broadcast between 9.30am and 5pm.

The Children’s Society, through its Debt Trap campaign, is calling for restrictions on loan advertising to join those already in place to protect children from adverts for gambling, alcohol, tobacco and junk food.

In particular, the charity is urging the Government to amend the Consumer Rights Bill to ban payday loan advertisements on TV and radio before the 9pm watershed.

Matthew Reed, of The Children’s Society, said: “We see the devastating impact of debt on children’s lives.

“It has become a battle for families to pay bills, the mortgage or rent, and find money for food or other basics.

“One setback or a simple mistake can lead to a spiral of debt.

“Children are exposed to a barrage of payday loan adverts which put even more pressure on families struggling to make ends meet and provide the basics.”

[…]

'Backing' for payday loan advert ban

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15 September 2014 Last updated at 15:33

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Three-quarters of British parents want payday loan firms to be banned from advertising to children on TV and radio, research suggests.

A Children’s Society survey of 1,065 parents suggests overwhelming support for a ban on adverts for these short-term high-interest cash advances.

A smaller survey of 680 teenagers found nine out of 10 recognised the names of payday loan firms.

Adverts are prohibited from encouraging under-18s to take out loans.

The charity’s campaign follows concern that interest rates of up to 6,000% a year on such loans can plunge families into problem debt.

‘Fun and tempting’

It also comes after a Commons Business Committee report warned adverts could expose children to the idea loans were “fun, easy and an appropriate way to access finance”.

The Children’s Society research reflects this, with a third of the young people surveyed saying they found payday loan adverts to be “fun, tempting or exciting”.

The charity wants to see restrictions on loan advertising like those already in place on adverts for gambling, alcohol, tobacco and junk food.

It is calling for the government to amend the Consumer Rights Bill to ban adverts before the 21:00 watershed.

Charity chief executive Matthew Reed said: “Through our front-line work we see first hand the devastating impact of debt on children’s lives.

Watershed

“We know it’s become a daily battle for families to pay the bills, meet the mortgage or rent payments, and find money for food or other basics. One setback or even a simple mistake can lead to a spiral of debt.

“Right now children are being exposed to a barrage of payday loan adverts, which put even more pressure on families struggling to make ends meet and to provide the very basics for their children.

“That’s why the law should be changed to ban these ads from TV and radio before the 9pm watershed.”

The Advertising Standards Authority is responsible for ensuring payday loan ads, wherever they appear, are socially responsible.

Its work compliments that of the Financial Conduct Authority, which is the lead regulator for financial advertising.

The ASA said: “This arrangement means that consumers are protected by a comprehensive set of rules covering all aspects of advertising for payday loans.

“We’ve acted robustly against payday loan advertisers found in breach the advertising rules, banning 24 ads since April 2013.”

But it pointed out that adverts – including those for payday loans – may contain elements that appeal to under-18s, such as colourful images or cartoons, without that meaning that the ad is “targeting” them, or otherwise causing them to engage with the product or service being advertised in a harmful way.

[…]

Payday loan debt problems soar | InvestmentWatch

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Payday loan debt problems soar

September 2nd, 2014

THE number of people struggling to cope with payday loan debts has risen by more than 13,000 in the past year, figures show.

Debt charity StepChange said they dealt with 43,716 people in the first six months of this year, compared with 30,762 for the same period last year.

Last summer, concern about the effect the high-interest loans was having in Wirral caused the council to act.

Councillors agreed a Liberal Democrat call to block access to websites offering payday loans on all local authority public computers in libraries and other buildings.

New figures, showing the StepChange has handled more than £72m in debts in the first half of 2014, highlight the need for further action to ensure better protection for vulnerable people who might consider taking a loan, the charity said.

Read more:

http://www.wirralglobe.co.uk/news/11446979.Payday_loan_debt_problems_soar/

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FCA facing calls for stricter payday loans cap | News | Money …

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FCA facing calls for stricter payday loans cap

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The FCA is under pressure to go further in its proposed clampdown on the payday loans sector after the number of people with short-term debt surged 42 per cent during the first six months of 2014.

New figures released by debt charity StepChange reveal the number of people with payday loan debts rose from 30,762 in the first half of 2013 to 43,716 in the same period this year.

FCA concerns trigger past business review at payday lender

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FCA predicts £420m loss for payday lenders as it sets out fee cap

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14 July 2014

Wonga hires ex-debt charity director as public affairs chief

7 March 2014

Furthermore, the total payday loan debt handled by the charity increased from £51m to £72m year-on-year.

In a bid to curtail the payday loans sector, the FCA has proposed capping the amount lenders can charge at 100 per cent of the value of the loan. The new rules are due to come into force in January 2015.

In its response to the FCA consultation, published alongside today’s findings, StepChange urges the regulator to consider implementing a stricter cap.

It says: “There is a case for a tougher total cost cap than 100 per cent of the value of the loan, especially in relation to higher value loans.

“The Competition and Markets Authority found that the average initial payday loan taken out is £260, while the average StepChange Debt Charity client with payday loan debt has an income (net) of £1,305.

“This means that someone with just one payday loan debt which reaches the 100 per cent cap would end up owing a substantial part of their income and could easily lead to further borrowing and deeper financial difficulty.”

StepChange chief executive Mike O’Connor says: “High-cost short-term credit is rarely the answer to financial difficulties. While, the FCA’s proposed price cap is a crucial step forward, there is still much work to be done to ensure that payday loans can no longer plunge people into a cycle of unsustainable borrowing and entrenched financial hardship.

“Consumers will continue to need access to short-term credit and FCA action should also stimulate the reform of this market. This needs to include problems in the adjacent markets including overdrafts, logbook loans and home credit where consumers also suffer detriment.”

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[…]

Payday loan troubles jump 42% – Credit Today

The number of people struggling to repay payday loans has risen 42% year-on-year, according to new figures from debt charity StepChange.

During the first six months of 2014 the charity assisted 43,716 people with payday loan debt, nearly 13,000 more than in the same time period last year (30,762).

The charity handled some £72,210,340 in payday loan debt between January and June 2014, a year-on-year increase of 41% (2013: £51,227,222).

A consultation on a cap for payday loans carried out by the Financial Conduct Authority (FCA) closed yesterday (1 September).

Mike O’Connor, chief executive at StepChange, said the figures show the sector is not treating customers fairly and has called on the FCA to impose stricter regulations.

O’Connor said: “High-cost short-term credit is rarely the answer to financial difficulties. While, the FCA’s proposed price cap is a crucial step forward, there is still much work to be done to ensure that payday loans can no longer plunge people into a cycle of unsustainable borrowing and entrenched financial hardship.

“Consumers will continue to need access to short-term credit and FCA action should also stimulate the reform of this market. This needs to include problems in the adjacent markets including overdrafts, logbook loans and home credit where consumers also suffer detriment.

“The goal of an affordable lending market treating consumers fairly will also involve others but the FCA has a critical role to play in creating the right environment.”

Published 2 September 2014

[…]

Payday loan problems? Watch the latest video from the Ombudsman …

Image Ombudsmanpaydayloan.png

Aug19

Payday loan problems? Watch the latest video from the Ombudsman

posted by in Payday Loans

Payday loans often add to your worries

Taking out a payday loan to deal with a money problem can be tempting but we know that it can lead to a slippery slope of debt and stress.

That’s why it’s great to see the Financial Ombudsman Service’s new video, aiming to highlight the dangers of taking out a payday loan.

As the video says, payday loan might give you short term relief but often only postpones the problem and the loan becomes an extra thing to worry about. We talk to people who’ve fallen victim to this all too often.

Watch the Financial Ombudsman’s video

How can the Financial Ombudsman help?

If you’ve got issues with payday loans the Financial Ombudsman can:

help you agree affordable repayments on your loan stop you being harassed by debt collectors deal with creditors when you’re being mistakenly chased for a loan in someone else’s name points you in the direction of people who can give in-depth debt advice

The Financial Ombudsman doesn’t give in-depth debt advice but if they think you need they’ll put you in touch with us here at StepChange Debt Charity.

What should you do if you’ve got payday loan problems?

There are four steps you can take to deal with a payday loan problem:

1. Don’t panic: it can feel overwhelming but help is available and things are rarely as bad as they first seem

2. Stop borrowing: many people take out new payday loans to pay off their old loans. This can lead to a quick snowballing of debt

3. Cancel loan payments if you can’t afford them: we’ve got in-depth advice on this in our How to cancel a continuous payment authority article

4. Get free debt advice: we can give you free and impartial advice on how to deal with your debts and help you find a practical solution. Our Debt Remedy advice tool will give you a personal action plan within 20 minutes.

No related posts. James Winterbottom has been a debt advisor for six years. Away from work he is an amateur app developer and writes fiction. James is a lifelong supporter of Huddersfield Town football club, which suggests he is either very loyal or very daft. He also likes to talk about himself in the third person in bio pages. Written by Tags Payday Loans […]

Payday loan costs cut in crackdown (From Falmouth Packet)


Payday loan costs cut in crackdown

Payday loan costs cut in crackdown

People using payday lenders in Cornwall are to see the cost of borrowing fall significantly under a crackdown announced by the financial regulator today.

The Financial Conduct Authority’s proposals for a cap on payday lending mean that from January interest and fees on new loans, including those rolled over, must not exceed 0.8% per day of the amount borrowed.

The watchdog said that those who borrow £100 for 30 days and pay back on time will not pay more than £24 in fees and charges and someone taking the same loan for 14 days will pay no more than £11.20.

Under the proposals, fees for borrowers who cannot repay their loans on time must not exceed £15 and they must never have to pay back more in fees and interest than the amount borrowed.

It means that someone struggling with repayments on a £100 loan will never pay back more than £200 in any circumstance.

The FCA estimates that consumers will save on average £193 per year through the measures, translating into £250 million annual savings overall. The price cap is set to cost the industry about £420 million in lost revenues.

FCA chief executive Martin Wheatley said: “There have been many strong and competing views to take into account, but I am confident we have found the right balance.

“Alongside our other new rules for payday firms – affordability tests and limits on rollovers and continuous payment authorities – the cap will help drive up standards in a sector that badly needs to improve how it treats its customers.”

Last year, 1.6 million consumers took out 10 million loans, with a total value of £2.5 billion. The average loan has a principal of around £260 lent over an initial duration of 30 days. The average number of payday loans taken out by a customer last year was six.

Payday lenders are already prevented from r olling over loans more than twice and have been restricted in their ability to drain money from bank accounts.

From July 1, firms operating in the industry have also had to place risk warnings on television adverts.

The £2.8 billion sector has come under intense scrutiny amid outrage over the way that some consumers have been treated. Many of the problems found by regulators have revolved around people taking on payday debt they cannot afford, meaning the loan is then rolled over and the original cost balloons.

Charity StepChange received nearly 14,000 cries for help last year from people who were struggling with five payday loans or more.

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[…]

Complaints against payday lenders double in a year | Left Foot …

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But it could be just the tip of the iceberg, says Financial Ombudsman Service

Complaints made against the payday lending industry to the Financial Ombudsman have doubled in the past year, according to the watchdog.

But the ombudsman also expressed puzzlement over the relatively small number of complaints made about the industry.

As Patrick Collinson of the Guardian has shown, a total of 399,939 people complained about payment protection insurance last year, while complaints for payday loans was a fraction of that at 794.

The watchdog said that many consumers were unaware they could make a complaint, and that lenders themselves – small firms as well as big ones – are doing nothing to highlight such services.

Complaints about payday lending are on the rise, and have been for some time. This time last year the industry was exposed by Citizens Advice as being “out of control”, with lenders frequently selling loans to people aged 18 and under, people with severe mental health difficulties and people who were drunk when they took on the debt.

At around the same time in 2013, complaints made to the Financial Ombudsman Service about the industry shot up 83 per cent – the third highest rise of any sector with the exception of the home credit industry (139 per cent) and payment protection insurance (PPI – 140 per cent).

Indeed, Citizens Advice found that many more people had cause to complain to the service. In its in-depth analysis of 665 payday loan cases, reported to its consumer service between 1 January and 30 June 2013, the charity found that at least 76 per cent of borrowers could have grounds for an official complaint to the Financial Ombudsman.

Those grounds included the 1 in 5 possible cases of fraud – where a person was chased for a loan they hadn’t taken out, the third of instances where money was withdrawn from a borrower’s account without an advance warning (potentially leaving them in a very precarious financial situation if they have other outgoings), harassment (including fake letters by lawyers, something we now know was practiced by Wonga), and the 1 in 10 loans that have been deemed unfair treatment of people in financial difficulties.

So clearly there should be many more complaints made about the industry than there currently are, even though that number has more than doubled. So what is happening?

The previously mentioned Patrick Collinson wonders whether it is because complaining is a middle-income, middle-aged response, and that those customers who are taking out payday loans are not au fait with using such services as the Financial Ombudsman.

There is some truth in this. With relatively little interaction with means to settle financial discrepancies, it is easy to see why many consumers would choose to find their own ways out of such problems.

However the industry those consumers are up against is experienced in pushing more loans, rather than responding to their efforts of financial resilience.

At a meeting recently I was able to see the volume of promotional emails one payday loan borrower received after falling on hard times with debt. In a six-month period, rather than assisting with help, or leaving the borrower be, the company sent the person dozens of emails offering larger and more expensive loans.

Then there is the shame. Many consumers don’t seek the help they need because of the shame associated with debt.

And yet the shame, if there is any, should be squarely leveled on the companies themselves who so often lend money irresponsibly and with impunity.

Charities like Citizens Advice and StepChange have stepped up to the challenge and advocated on behalf of greater complaining for the wrongs of payday lending. Trades Unions like Unite the Union and Unison have done the same. Civil society corrections to predatory capitalist ills.

Consumers must not let these companies get away with it.

Carl Packman is a contributing editor to Left Foot Forward and the author of Loansharks: The Rise and Rise of Payday Lending

[…]