Payday loan ads 'should be banned', say parents

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The figure comes from a report by The Children's Society charity, which also revealed that 72% of teenagers have seen at least one payday loan ad in the past week, with more than two thirds saying they'd seen one on TV in the past seven days.

A third of teenagers said they found the adverts fun, exciting or tempting, and a quarter of those children said they would consider using payday loans when they were older.

On the back of the report, the charity has launched a campaign asking the Government to change the Consumer Rights Bill so the adverts are banned from all TV and radio channels before 9pm.

Pester power

The charity has highlighted the Financial Conduct Authority's finding that one payday lender included branded colouring-in sheets with its loan application forms, saying such tactics contribute to making the loans seem like a normal way to deal with day-to-day finances.

Half of the parents surveyed said they felt the companies' adverts had the same result.

More than a third said they believed the adverts deliberately target children, and 27% say they think payday lenders put pressure on children to pester their parents to borrow money.

In fact, research from Moneysavingexpert.com has found that among parents with children under 10, 14% who refused to buy something for their child were then nagged by their offspring to use a payday loan to pay for it.

And a possible effect of growing up with payday loan ads is also being seen among young parents. Almost 40% of those aged between 18 and 24 have taken out a payday loan, compared to 18% of parents aged 25-34.

Restriction and regulation

Last year a committee of MPs called for the ads to be banned from children's television - but Ofcom figures showed that only 3% of this kind of advertising seen by children aged between four and 15 was on children's channels.

The Children's Society's new campaign addresses that, by demanding the ads are removed from daytime television all together.

But they could still appear during popular post-watershed shows - so the charity wants restrictions on advertising around programmes likely to appeal to those under the age of 18.

It is also calling for regulations to prevent adverts "inadvertently attracting children" - as with the payday lender Wonga, who agreed to remove puppets from its campaigns.

Local responsibility

And it wants local authorities to consider banning or restricting payday loan adverts on council-owned billboards and bus stops, especially in areas where children are more likely to see them, such as near schools and parks.

Another recommendation is that they block access to payday loan websites from public computers - in libraries and other council buildings - and instead redirect users to other resources such as credit unions.

But while credit unions do offer cheaper borrowing, qualifying for a loan often means being a member and saving for some time first - which is not ideal when a genuine emergency occurs.

Meanwhile low-credit-score credit cards, with otherwise high interest rates of up to 50% p.a., still cost less per year than payday loans do per month. But they do not offer the convenience of almost instant money - and their providers are not allowed to make unsolicited marketing calls.

That's in contrast to the payday lenders, who can make such calls.

Stepchange Debt Charity says some 15% of its clients took on high-cost credit after being phoned like this. Once on the lenders' databases, they are often contacted again and again. More than 40% of those who have previously had a payday loan say they are called more than once a day.

So what else is being done?

Pupils will start to get lessons about budgeting, credit cards, and consumer rights this academic year, a move The Children's Society chief Matthew Reed agrees with:

"Through our front-line work we see first-hand the devastating impact of debt on children's lives. We know it's become a daily battle for families to pay the bills, meet the mortgage or rent payments, and find money for food or other basics. One setback or even a simple mistake can lead to a spiral of debt.

"It is crucial that children learn about borrowing and money from their school and family - not from irresponsible payday loan advertising."

But that isn't soon enough to prevent many more children being exposed to payday adverts, as Reed concludes: "A significant majority of parents back a ban and it's now time for the Government to act."