26 Nov 2014

The Government has asked the advertising watchdog to investigate imposing greater curbs on TV and radio advertising for payday loans, after members of the House of Lords raised concerns about the impact of advertising on children.

The announcement was made in the House of Lords during a debate on the Consumer Rights Bill on Wednesday. Minister Baroness Jolly said the Broadcast Committee of Advertising Practice (BCAP) had agreed to broaden the remit of its review into the content of payday loan advertising to consider scheduling rules too. Its review will be published in full in the new year.

The Children’s Society has been campaigning for a ban on payday loan advertising on TV and radio before the 9pm watershed - to protect children from the impact of irresponsible payday loan advertising – and peers were contacted 16,707 times over the past few weeks to encourage them to support a ban during the Lords debate.

Matthew Reed, Chief Executive of The Children’s Society, said: 'Today’s decision by Government to ask the advertising watchdog to review the rules on when payday loan adverts can be broadcast on TV and radio is a positive step. We welcome ministers’ recognition that the impact of such advertising on children is a major cause for concern. We will be passing our evidence to the watchdog and will be pushing for an early decision to ban these ads before the 9pm watershed.

'Our research shows that children are routinely being exposed to advertising that makes high-risk, high-cost loans seem fun or normal. And the majority of British parents support a pre-watershed ban. Children should learn about borrowing and debt from their school and family – not from irresponsible payday loan advertising which encourages families to fall into problem debt.'

The campaign has been championed in the House of Lords by the Lord Bishops of Truro, Norwich and Birmingham – as well as Lords Alton (Crossbench) and Mitchell (Labour). The Lord Bishop of Birmingham, speaking in Wednesday’s debate, described payday advertising as ‘unsuitable for children and is corrosive to the family’.

He said: ‘We expected change and change has begun to happen. There is certainly a mood in the House today that further change should take place, change that must happen quickly. Children grow up very quickly and one or two influences at a certain age can make a dramatic difference, not only to them but to the behaviour of their parents, as has been so well illustrated today.’

The Government also announced that the Financial Conduct Authority will be consulting on restrictions to nuisance phone calls, texts and emails from payday lenders.

Matthew Reed said: 'Payday loan companies must be banned from making nuisance phone calls. Now is time for the Financial Conduct Authority to take firm action and outlaw this practice. These companies are frequently targeting vulnerable families, already struggling to make ends meet, with calls encouraging them to take out loans that force them into a downward spiral of unmanageable debt. Four in ten parents who have taken out a payday loan say they were contacted more than once a day by payday loan companies. Current rules prohibit the telemarketing of mortgages but not payday loans. This is totally unacceptable.”

Background

 

Payday loan companies provide short-term cash advances at very high annual interest rates, which can plunge families into problem debt. Despite this, children are routinely exposed to adverts for payday loan companies.
 
In a survey carried out earlier this year for The Children’s Society, three-quarters of British parents (74%) said they wanted payday loan companies to be banned from broadcasting TV and radio adverts to children.
 
An online YouGov survey of children aged 13-17, carried out for The Children’s Society, found almost three quarters (72%) had seen or heard an advert for payday loans in the last seven days.
 
The name recognition of payday loan firms among teenagers is extremely high, with 93% knowing at least one of eight top payday loan companies. More than half of children (55%) were able to recognise at least three lenders.
 
One third (34%) of children surveyed found payday loan adverts to be 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 (34%) of parents surveyed online by YouGov believe payday lenders’ adverts deliberately target children. And more than one quarter (27%) think the companies put pressure on children to pester their parents to borrow money.
 
It follows research by Ofcom last December that showed the number of payday loan adverts on television had increased by more than 20 times over the past four years to 397,000. The research found more than half (55%) of all payday loans adverts on TV were broadcast in the daytime schedule before 5pm.
 
The figures were featured in the report, Playday not Payday: Protecting children from irresponsible payday loan advertising, published by The Children’s Society earlier this year.
 
The charity – 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.
 
A report earlier this year by The Children’s Society and StepChange Debt Charity, The Debt Trap: Exposing the impact of problem debt on children, showed how family debt causes children to suffer from worry and anxiety, experience bullying and miss out on essentials.
 
A survey commissioned for the report found almost two and a half million children across the country live in families owing a total of £4.8bn in bills and loans. It also found that more than half of all 10 to 17-year olds see payday loan adverts “often” or “all the time”.
 
The Children’s Society’s Debt Trap campaign aims to expose the damage debt does to children and to take the pressure off families who are struggling to make ends meet.

Media enquiries


For more information, call 020 7841 4422 or email media@childrenssociety.org.uk. For out-of-hours enquiries please call 07810 796 508.


Notes to editors


• All figures, unless otherwise stated, are from YouGov Plc.
• Parents of children aged 18 or under: Sample size was 1,065 adults. Fieldwork was undertaken between 3rd - 5th September 2014. The figures have been weighted and are representative of GB parents of children aged 18 or under. Children aged 13-17: Sample size was 680. Fieldwork was undertaken between 29th August - 3rd September 2014. The figures have been weighted and are representative of GB children aged 13 – 17. Both surveys were carried out online.
• Findings about children’s attitudes to payday loan adverts are based on a calculation conducted by The Children’s Society, based on the YouGov figures.
• More information about Ofcom’s research highlighting an increase in TV ads for payday loan companies is available on the Ofcom website.
• Find out more about The Children’s Society’s Debt Trap campaign.
• The Children’s Society has helped change children’s stories for over a century. We expose injustice and address hard truths, tackling child poverty and neglect head-on. We fight for change based on the experiences of every child we work with and the solid evidence we gather. Through our campaigning, commitment and care, we are determined to give every child in this country the greatest possible chance in life.