CONSUMER CREDIT CCR
BCAP TAKES PAYDAY TO THE WATERSHED?
Despite payday lender adverts being found to not be targeting children, there is set to be a public consultation on whether there is a need for further regulation By Russell Hamblin-Boone
distinction must be made between such ’near HCSTC’ lenders and actual HCSTC advertisements if BCAP is to accurately survey the market. Some BCAP restrictions on advertising
alcoholic beverages are detailed as follows: include personalities with specifically a strong youth appeal; themes and language associated with young people; teenage fashion, clothing and music; cartoons, rhymes, animation, puppets and animals ‘likely to inspire strong affection in the young’. These features are prohibited to marketers of alcoholic beverages because they are designed to attract the attention of younger viewers and aid retention and recall. A review of recent HCSTC advertisements shows that these types of youth triggers are conspicuously absent. If HCSTC lenders are attempting to appeal to the youth market, they are doing a poor job of it. Wonga, for instance, has released a
new advertising campaign that can best be described as ‘staid’ in comparison to previous productions. As the UK’s largest HCSTC lender, Wonga’s advertising stance will no doubt influence the rest of the industry, which, to be entirely fair, has already been picking up on this new style of promoting their services. In this case, the example of socially responsible lending has been set. This new campaign is demonstrably devoid of any feature that appeals to children. Lending Stream’s ‘level-headed’
campaign stresses balancing budgets and responsible loan amounts in a way that is interesting but, again, obviously not directed at younger viewers. Clearly the presentation is appropriately targeted and does not trivialise the product. Peachy and Sunny both run campaigns
that are more akin to mainstream financial services advertising, focusing on
July 2015
responsible financial management. Satsuma has combined fruit with
HCSTC product price comparisons in a way that is designed to deliver useful product information to age-appropriate borrowers in a responsible way. This advertisement seems designed to show that price competition is fierce in HCSTC even after January’s implementation of the FCA rate cap. Concerns about the impact of HCSTC
advertisements on children are understandable, if unfounded. Responsible firms already self-impose ‘bans’ on advertising on children’s channels and even on adult programmes that are heavily weighted to youth viewership. The majority of HCSTC advertisements
fall during the day when children are expected to be at school. Advertisements are targeted to adults who are eligible to access the product, not to children who are not. Claims that the HCSTC industry is
‘grooming the next generation’ lack credibility and evidence. Besides which, they do not make commercial sense: today, greater management portability and concentration on shorter-term profit and remuneration goals make such a ’20-year plan’ untenable, even if one wished to attempt such a scheme. Stock markets grade firms shares on quarterly results and are unlikely to reward management for such a dubious and long-term strategy. In the HCSTC market specifically,
newspaper headlines of senior management changes at HCSTC firms abound; making the premise that modern executives would sacrifice yearly bonus payments while waiting five to 10 years for little Alistair to grow up and take a HCSTC loan absolutely absurd. Many of today’s executives will have retired or moved to another industry before such
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an ‘investment’ would (or more likely would not) bear fruit. This is to say nothing of the fact that
many HCSTC firms did not exist as recently as five to seven years ago. The market is comprised of small firms in comparison with the older, established financial firms like banks, credit cards and motor-finance providers. The online HCSTC market, in particular, has been built mostly by start-ups. Many of these lenders have absorbed heavy losses through the start-up phase and are now facing a shrinking market and much greater regulatory expenses. Today’s HCSTC market is a poor candidate for the sort of extensive and expensive long-term ‘grooming’ campaign of which it stands accused. From the detractors’ side, questionable
research on the topic of HCSCT scheduling relies almost exclusively on highly emotive, anecdotal sentiments and features highly biased survey questions with no semblance of a control group. In one such study, the levels of recall and retention evidenced by children are so high that they are practically impossible to achieve; marketing executives might dream of achieving 10% of the results described. The very magnitude of the ‘pester factor’ results calls the integrity of this study into question. The BCAP consultation should present
an effective opportunity to explore these issues in a credible, evidence-based environment. Legitimate research and evidence relating to these issues are much-overdue and will be valuable in discerning the facts of the matter instead of relying on popular sentiment and media and political grandstanding. CCR
Russell Hamblin- Boone is chief executive of the Consumer Finance Association
Russell.hamblin-boone@cfa-uk.co.uk
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