Wonga’s Payday Loan Advert Banned From TV

October 8, 2014

An ad for Wonga.com’s payday loans has been banned from British TV screens after falling foul of regulations imposed by the Advertising Standards Agency (ASA).

The ASA has been closely scrutinising the promotions deployed by payday loan companies in the UK of late and decided that a recent offering from Wonga did not do enough to show potential borrowers what the risk involved can be.

At the centre of the ASA ruling is a Wonga ad in which a man is seen jotting down figures relating to a payday loan on a napkin but which does not explicitly reveal the loan’s likely interest rate.

The ASA decided that the ad must not appear on British television in its current form because a number of relevant regulations were breached. The agency was initially altered to the issue by the charity group Citizens Advice.

“Adverts must be clear about what taking out a loan means and how much it will cost,” said Citizen’s Advice chief executive Gillian Guy in a statement. “The consequences are really serious when payday lending goes wrong. High interest rates and fees can mean that a small loan balloons into a huge debt.”

“With five out of the seven adverts we reported to the ASA now banned, both the advertising and payday loan industries need to look at why so many adverts are not meeting the grade and change their ways,” Guy went on to say.

The ASA announced in September that it intends to “keep payday loan ads in check”. Over the course of this year the regulator has taken action against payday lenders whose advertising it deemed to have “trivialised the decision to take out a loan or encouraged the use of payday loans for non-essential items”.

“We remain committed to ensuring that the right levels of protection are in place for consumers and vulnerable groups, so that ads are appropriate and don’t cause harm,” the ASA said last month.

Wonga recently announced it would write off debts owed by 330,000 of its payday loan borrowers in the UK after being instructed to do so by the Financial Conduct Authority (FCA). It is understood that the debt write offs related to £35 million worth of payday loans issued but sums potentially as high as £220 million when interest fees and charges were added to the equation.

“We have strengthened our lending criteria to ensure that we only lend to customers we believe can reasonably afford to repay their loans,” Wonga said in a statement.

“We are determined to drive up standards in the consumer credit market and it is disappointing that some firms still have a way to go to meet our expectations,” said the FCA’s director of supervision Clive Adamson.

John Baird

Insolvency Adviser

Tel: 0800 063 9250

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