Floella Benjamin Says Payday Loan Ads Are a ‘Way to Prepare’ Kids to Think Debt is Normal
Former children’s television presenter Floella Benjamin said the ads were used to make the loans look “tempting and exciting”
TV commercials are used by payday loans as a form of “preparation” to persuade children that debt is part of normal life, it was claimed today.
Former children’s television presenter Floella Benjamin said the ads were used to make loans “tempting and exciting.”
Ministers have been called on to intervene to limit the “harmful effects” of promotions on families and children.
Last year, the government rejected calls to stop ads using catchy songs and puppets during children’s programs.
Research has shown that ads from companies offering short-term, high-interest loans were viewed almost 600 million times by children in the past year.
But ministers said it was still a “relatively minor” problem.
In the House of Lords today, Baroness Benjamin urged the government to take action.
The peer Lib Dem said, “Research from the Children’s Society shows that many children think payday loan announcements are tempting and exciting.
She said 61% of parents believed ads made children believe they were “a normal way to manage their money every day.”
Baroness Benjamin added: “It is, in a way, a subtle way of grooming.”
She asked, “What is the government doing to make sure everyone understands the harmful effects of payday loan announcements on children and families.”
Culture Minister Baroness Shields said the government was concerned about the “consumer harm” of the payday loan market.
The introduction of “mandatory risk warnings and debt advice flagging” was part of the new regulations.
She pointed to a 35% drop in the number of payday loans since April of last year and a 53% drop in reports of problems with payday loan companies.
For the opposition, Lord Stevenson of Balmacara said many peers believe payday loans should be treated as seriously as alcohol and gambling.
He said alcohol and gambling were not allowed to be advertised until the “turning point” and asked why that was not the case with payday loans.
Lady Shields said that was the subject of the Ad Practices Broadcast Committee consultation that was about to begin.
The exchanges came as the Consumer Finance Association reported short-term lending had been cut 68% in two years as regulators imposed price caps.
Wonga, the UK’s largest payday loan company, revealed in April that it recorded a loss of £ 37.3million last year
The Financial Conduct Authority (FCA) is trying to eliminate questionable companies.
It has been predicted that hundreds of payday lenders will be wiped out by tougher rules designed to protect customers.
Wonga, the UK’s largest payday loan company, revealed in April that it recorded a loss of £ 37.3million last year.
He followed a significant cut in consumer lending in the UK as he tried to clean up his tarnished image. Revenue fell to £ 217.2million during the period, down almost £ 100million.
The city watchdog predicted that only three or four out of 400 payday lenders would remain standing after the rules were introduced in January.
They include a 0.8% daily interest cap and tighter accessibility controls to ensure customers can repay their loans.