My Lords, the Government are determined to ensure that children are protected from inappropriate advertising by payday lenders. We support the recent review and revised guidance from the Broadcast Committee of Advertising Practice warning advertisers against trivialising or distorting the serious nature of payday loan products. This advice strengthens protection for both children and adults, and we look forward to BCAP’s forthcoming public consultation on scheduling.
I am grateful to the Minister for that reply. Perhaps I may ask her two things. First, can she enlighten the House about the members of BCAP who conducted the review into the effectiveness of rules protecting children? Secondly, does she agree with the committee’s rather perverse conclusion regarding one particular advertisement, which featured children in the lead-up to Christmas sitting under a Christmas tree unwrapping presents, that it did not have an “undue appeal to children”?
Addressing the noble Lord’s second question first, the BCAP review actually said that it appealed to children but also to vulnerable adults, and the new rules are aimed at addressing that matter on behalf of both groups. The ASA Council governs BCAP and it must seek advice from the Advertising Advisory Committee on the consumer perspective in all broadcast issues. Two-thirds of the members of the ASA Council come from outside the media industry, while BCAP is made up of media representatives, although it is subject to the oversight of the ASA, so we believe that it is an impartial body.
My Lords, research by the Children’s Society shows that many children think that payday loans adverts are tempting and exciting, and 61% of parents think that payday loan adverts make children believe that they are a normal, everyday way of managing money. This, in a way, is a subtle form of grooming. Seeing bailiffs removing property when parents cannot repay loans is traumatic for children. What are the Government doing to make sure that everyone understands the damaging effects that payday loan advertisements have on children and their families?
The Government are concerned about consumer detriment from the payday loan market. The introduction of mandatory risk warnings and signposting to debt advice is part of this new regulation. Since April 2014, when the FCA took over responsibility for regulating consumer finance from the Office of Fair Trading, there has been a 35% drop in the number of payday loans, and Citizens Advice has today announced a 53% drop in reported problems with payday loan companies.
My Lords, research by MoneySavingExpert found that one-third of parents with children under the age of 10 have heard their children repeating slogans from payday loan adverts. We have already heard from the noble Baroness about research from the Children’s Society entitled Playday not Payday. It also found that 34% of adults believe that these adverts are specifically focused at children, and 27% said that they believed that they were pressurising children to ask their parents to take out loans, so the evidence from parents is fairly clear. In the light of the Government’s welcome emphasis on personal responsibility and financial prudence, does the Minister think that it is more important that we listen to people who are associated with the advertising industry or to the voices of the parents, who are pretty clear what these adverts are actually doing?
The ASA has taken action in the past two years on 25 advertising campaigns created by the payday loans industry and banned them from broadcast. We as a Government take this very seriously; hence we support the recommendations in the BCAP review which take note of it. We believe that the advertisements that the Children’s Society flagged in the study that it released would be banned under the new rules.
As I said, the BCAP committee is an industry body, but it reports to the ASA, which has oversight of it. I do not have the names of the individuals responsible for this particular review and I will have to write to the noble Lord with them, but they are industry executives with the oversight of the ASA, which is an independent body led by the noble Lord, Lord Smith of Finsbury. Its members are impartial and are recruited openly.
I congratulate the noble Baroness on her first appearance at Question Time, following her star appearance—not seen by many in your Lordships’ House, but still very good—last Friday.
Your Lordships’ House will be aware that, led by the Bishops’ Benches—and by the most reverend Primate the Archbishop of Canterbury, no less—we spent a lot of time in the previous Parliament considering what payday lending represented in society today. The general view around the House and a very strong recommendation to those responsible for the Bill at the time was that we should treat payday lending as seriously as we treat alcohol and gambling. It is interesting that, under the BCAP regulations, alcohol and gambling are not allowed to be advertised before the watershed. Why is that not the case for payday lending?
I am delighted to say that that is the subject of the forthcoming BCAP consultation. It will be specifically about scheduling and when it is appropriate for those adverts to appear.
My Lords, does not the noble Baroness agree that it is a great pity that we live in a society where payday loans are necessary at all and where children are living in poverty when their parents are actually working? Will not the removal of tax credits from working parents make the situation a great deal more difficult, making them turn again to payday loans and leading them into a spiral of debt?
I appreciate the concern expressed by the noble Baroness. As your Lordships know, payday loans have been a subject of much scrutiny. As I mentioned, the regulations are such that you cannot charge more than 100% interest, which sounds like a lot, but these are meant to be short-term financial instruments; if you pay them back in 30 days there is no charge or a very small charge. The guidance and advice are about ensuring that advertisers do not mislead people, but we need to educate consumers about the fact that these are not long-term financial instruments and that they should be treated as such.