There may not be as many adverts from instant cash loan companies on the television in the near future, if ministers threatening to crack down on providers of short term loans move forward with their plans, experts say.
The movement comes on the heels of pressure exerted from various MPs accusing the payday advance industry of running adverts specifically targeting vulnerable classes of people such as those on benefits. Detractors say that these lenders are extending credit to borrowers without ensuring that the loans can be repaid without difficulty, with the Department for Business, Innovation and Skills deciding the next steps it will take once the Office of Fair Trading’s investigation of the industry is concluded.
Sources from within the Government have reported that, unless the industry begins policing itself with more rigour, the adverts would be ‘reined in’ through any means available, which includes taking legislative steps to do so. The OFT, which has already gathered data on more than 50 online lenders’ websites, has contacted seven trade bodies with demands to improve advertising standards, and as the OFT has the authority to revoke a lender’s credit licence for non-compliance, the watchdog has the bite to back up its bark, experts say.
Consumer Affairs Minister Norman Lamb remarked that he looks forward to seeing the OFT’s findings, and added that they will be used to drive up standards and take further enforcement action where necessary. This could include both bringing transparency to the lending market and improve consumer protections, the minister said, and with the payday lending market ‘exploding’ to around £1.9 million in revenue in 2010, MPs say that these protections need to be put in place.