CONSUMER CREDIT CCR
t Advertising regulation: payday loans after 9pm?
t FOS view on complaints t Regulatory changes
payday, or, high-cost, short-term credit (HCSTC) firms’ television advertisements. The final report listed some additional guidance but concluded that lender advertisements were not improperly affecting children’s behaviour. Nevertheless, BCAP has responded to
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campaigners’ pressure by announcing a public consultation into the need for further regulation, specifically on the scheduling of HCSTC advertisements. A ‘watershed’ ban, or a ban on HCSTC advertisements running before 9pm, is widely expected to be one of the measures in the consultation. This decision to consult is consistent
with BCAP’s claim to “be an authority on advertising and active on issues that cause societal concern”. The HCSTC industry should welcome an evidence- based review of its advertising to allay some common misconceptions and refute the small body of poorly-conducted research that has, along with popular sentiment and anecdote, been used to lobby for advertising restrictions. In anticipation of the need to provide
rationale and evidence showing that scheduling restrictions on HCSTC television advertisements are unnecessary, the primary issues to be addressed are current compliance with regulations, youth access to, and retention of HCSTC advertisements, and spurious claims of ‘grooming the next generation’. Firstly, BCAP’s review “assessed 145
ads against the rules and did not find substance in perceptions that some
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he Broadcast Committee of Advertising Practice (BCAP) recently concluded a review of
payday loan ads are aimed at encouraging children to ask their parents to take out a payday loan”. All of these advertisements were run before payday lenders came under the jurisdiction of the Financial Conduct Authority (FCA) in April 2014. The FCA has taken a strong stance as
lead regulator on financial promotions, including undertaking a recent investigative review of consumer credit financial promotions and creating a dedicated financial promotions supervision team to monitor firms’ activity. Given the FCA’s active regulation of the HCSTC market to date, it is likely that industry standards have already
HCSTC advertising on television has
been inaccurately portrayed as pervasive. Ofcom figures show that in 2012, HCSTC advertisements made up just 1.2% of all advertising spots on commercial television. The Broadcasters’ Audience Research Board (BARB) figures show that in 2014, this had decreased to 1.1%. The percentage of HCSTC advertisements viewed by children four to 15 years old as a portion of total advertising being below 1%; 2014 figures from BARB indicate that HCSTC advertisements comprise just 0.78% of the total seen by children four to 15 years old. Finally, by all recent accounts, the HCSTC market has contracted by
Youth triggers are conspicuously absent – if HCSTC lenders are attempting to appeal to the youth market, they are doing a poor job of it
improved drastically since BCAP’s review period. HCSTC advertising is already
efficiently monitored and regulated. Firms abide by the same advertising and marketing regulations as all other consumer-credit providers. All broadcast advertisements must be approved by Clearcast before appearing on air. In the event of a complaint, the Advertising Standards Authority (ASA) vigorously investigates the advert in question against applicable codes and statutes to determine whether or not it should continue to be broadcast. If the ASA decides an advertisement is in breach of any strictures, it mandates immediate alteration or removal from circulation.
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nearly half since 2013 and this shrinkage is likely to affect advertising levels. In fact, it will be important for BCAP
to distinguish between HCSTC advertisements and those for products that fall outside of HCSTC definition but target a similar demographic. FCA regulations, close supervision
and the rate cap have resulted in a reduced supply of HCSTC credit. A number of sub-100% APR lenders have recently increased their advertising presence in an effort to acquire borrowers that are no longer served by HCSTC firms. These are noteworthy in their slapstick presentation that seems more youth-oriented than any currently- featured HCSTC advertisements. A clear
July 2015
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