Concerns about payday loan providers have been a hot topic recently. We’re alive to these societal debates, particularly when advertising that falls within our responsibility could be potentially misleading or socially irresponsible.
Only recently we banned a payday loan ad on these grounds. The ad, by Cash Lady, featured Kerry Katona and was irresponsible because it made references to her past financial difficulties, and implied it was more convenient and desirable to get a loan through payday lenders than high street banks. You can read the ruling here.
Since the Cash Lady ad was banned, an amended version of the ad has been released by the advertiser. The ad was pre-vetted by the body responsible for pre-clearing TV ads, Clearcast, in light of our ruling.
There are limitations to what action we can take when a product is legally allowed to be on the market, and legally allowed to be advertised. We occasionally receive calls to ban entire sectors from advertising altogether. This sort of action requires legislation and a decision from Government; our role is to make sure that legally permitted ads are prepared in a responsible way and don’t contain anything harmful or likely to mislead.
We can’t ban an ad because some people dislike the particular product being advertised, or the rate of APR (Annual Percentage Rate) that applies. We have to make proportionate and evidence based decisions when judging ads.
Unusually, the current laws for financial advertising mean that we share our responsibilities for regulating these kinds of ads with other bodies, including the Office of Fair Trading (OFT). We’re responsible for matters of serious or widespread offence, social responsibility and the truthfulness of claims that do not relate to specific characteristics of the financial product itself. But in certain areas, for example the display of an APR or claims about the product itself, we can act only as far as the law permits. In addition, we are the lead regulator for TV and radio, whereas the OFT leads in other media.
Despite our limited role, if you see an ad for a payday lender that you think is problematic, then please get in touch. Even if you’re not sure whether we’ll deal with your concern, come to us and if we can’t help, we can direct you to the right body.
Finally, in the wake of the financial crisis, there are changes afoot in the regulation of financial services. The new Financial Conduct Authority will be taking on responsibility for regulating the payday loans sector from the OFT and will be reviewing the statutory rules covering payday loan ads in the coming months. We’ll keep our website up to date with changes as we hear about them.