Ad description
A TV ad, for a short-term loan provider, featured three people briefly describing their personal circumstances and stating that Oakam had given them a loan. The first, a young woman holding a baby, said, “I thought, being on benefits, you’d say no to a loan. But you said yes. Thanks, Oakam.” On-screen text displayed throughout the ad stated “Conditions apply. You must be 21+ and a UK resident for 6+ months. With a minimum income of £400 from salary or benefits”.
Issue
Two complainants challenged whether the ad was socially irresponsible, because it encouraged people on government benefits to take out a payday loan.
Response
Oakam Ltd (Oakam) said they did not offer payday loans. They offered small, structured loans with terms of three to six months (as well as larger and longer term loans of up to 36 months), which customers paid back by reducing the principal and serving interest with each repayment. It was not possible for customers to ‘roll over’ payments. They said these characteristics were in contrast with payday loans which were repayable in full, plus interests and charges, on the customer’s next payday, and which could be ‘rolled over’. In addition, they said their annual percentage rates (APRs) were significantly lower than those typically charged by payday lenders.
Oakam said that over 40% of their new business came from referrals from existing customers, and that 57% of their customers who received some form of government benefit were referred by a friend or family member. They said the majority of their customers were dealt with face-to-face, and they did not have a full online application process. All applicants were required to undergo an interview with one of their advisors. Oakam said they carried out exhaustive affordability checks on their customers, ensuring that monthly repayments were affordable and sustainable to all customers; customers on government benefits were not exempted from those requirements.
Clearcast endorsed Oakam’s response. They said that many people, whatever their circumstances, found themselves in need of a loan from time to time. They considered companies such as Oakam provided a safety net in situations where banks and other lenders would not bear a risk because applicants had a low income, whilst at the same time ensuring that applicants went through appropriate checks to ensure they would be able to make loan repayments. They considered the ad was not socially irresponsible.
Assessment
Not upheld
The ASA acknowledged Oakam’s service differed from payday lenders, in that they offered short-term but structured loans, as well as longer term loans, where customers paid back a portion of the principal and the interest each week, fortnight or month and could not ‘roll over’ payments. We also noted that applicants were required to undergo an interview with an advisor, usually face-to-face, to ensure they could afford to pay back a loan. We noted that process applied to all applicants regardless of their income or its source.
We noted the ad showed a young woman who stated, “I thought, being on benefits, you’d say no to a loan. But you said yes”, a woman wearing hospital scrubs who said “I told you my weekly budget. You gave me a loan I could afford” and a man who said “I’ve only been in England for a short time, and you still said yes”. We noted that on-screen text shown throughout the ad stated “Conditions apply. You must be 21+ and a UK resident for 6+ months. With a minimum income of £400 from salary or benefits”. We noted the people’s statements and tones of voice were matter-of-fact and that the accompanying on-screen text presented significant information about eligibility requirements. We considered the ad therefore communicated to viewers that those on government benefits and those who did not have long-established credit histories in the UK would not automatically be ineligible for a loan from Oakam (in contrast to some other lenders) and that Oakam worked with people on lower incomes to ensure a loan would be affordable, but that there were still significant conditions attached to eligibility, including that applicants must have a minimum level of income. We considered that in that context the ad presented information about various aspects of Oakam’s service alongside key eligibility information. We concluded the ad was not socially irresponsible.
We investigated the ad under BCAP Code rule 1.2 1.2 Advertisements must be prepared with a sense of responsibility to the audience and to society. (Responsible Advertising), but did not find it in breach.
Action
No further action necessary.
