Payday loan firms warned 'the clock is ticking' over ads

Wonga: payday loan company
Wonga: payday loan company

Payday loan firms such as Wonga could be forced to place "clear risk warnings" on their ads or face an advertising ban from the Financial Conduct Authority (FCA).

The FCA has set out proposals for risk warnings as part of its vision of how the new regime will regulate consumer credit when it takes over from the Office of Fair Trading on 1 April.

Tighter restrictions will be placed on what payday lenders can say in ads, with the FCA able to ban any that are misleading.

The ability to ban adverts is usually the remit of the Advertising Standards Authority (ASA), but the ASA said it is "entirely comfortable with and aware of" the proposals.

An ASA spokesman said: "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."

Impending tighter regulation of advertising payday loans comes after a concerted campaign against Wonga by Labour MP Stella Creasy.

Proposals by the FCA include clear risk warnings being displayed on all ads and promotions, along with more information about debt advice.

Martin Wheatley, chief executive at the FCA, said: "Today I’m putting payday lenders on notice. Tougher regulation is coming and I expect them all to make changes so that consumers get a fair outcome. The clock is ticking."

"We believe that payday lending has a place but this type of credit must only be offered to those that can afford it and payday lenders must not be allowed to drain money from a borrower’s account."

The FCA is opening a consultation around its proposals, which will open on 3 December with the final rules and guidance set to be published in February 2014. 

The Advertising Association points out the announcement means the prospect of a blanket ban on payday loan advertising has been ruled out.

A spokesman said: "Crucially, today’s FCA consultation takes an advertising ban off the table. It is important that legal, decent, honest and truthful ads are free to encourage competition in a market which sorely needs it."

Discussion

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus
Brand Republic Jobs

subscribe now

Latest

Waitrose boosts content strategy with 'Weekend Kitchen with Waitrose' C4 tie-up
Hottest virals: Cute puppies star in Pedigree ad, plus Idris Elba and Fruyo
Amnesty International burns candles to illuminate new hope
Toyota achieves the impossible by calming angry Roman drivers
Tom of Finland's 'homoerotic' drawings made into stamps
YouTube reveals user habits to appeal to 'older' marketers
Ex-M&S marketing chief Steven Sharp consulting at WPP
Wolff Olins reveals new CEO after Apple poaches Karl Heiselman
Glasgow offers £30,000 prize to best digital idea for 2014 Commonwealth Games
Google's revenues surge but shares drop as it grapples with transition to mobile
Facebook beats Twitter to most 'marketing friendly' social media site crown, says DMA
Fableists believe children like Finn should be outdoors enjoying life
Homebase, Baileys and Camelot join the line-up at Media360
MasterCard renews Rugby World Cup sponsorship to push cashless message
Lynx unleashes £9m 'Peace invasion' campaign
Social Brands 100 Youth: Pizza Hut most social youth brand in UK
Cheryl Cole is wild and arresting in new L'Oreal work
Morrisons told not to show alcohol ads during YouTube nursery rhymes
O2 head of brand Shadi Halliwell departs after 23 years at company in restructure
Tesco hit by further sales decline as it turns to digital Clubcard and social network
Branding guru Wally Olins dies aged 83
Duracell short film captures epic Transatlantic voyage
Ash runs Tinder experiment to show smokers are less desirable to opposite sex
British Airways teams up with Gerry Cottle Jnr for summer of rooftop film screenings
Arklu says 'girls can be superheroes too' with doll design competition
Coke enters squash market with Oasis Mighty Drops
Virgin Galactic signs up Land Rover as space flight sponsor
Motorola marketer Andrew Morley departs as Google gears up for sale to Lenovo
US Airways apologises after tweeting obscene image at a customer
Mumsnet admits users' emails and passwords accessed via Heartbleed bug