Payday firm TV ads are irresponsible per Bcap and FCA

The Financial Conduct Authority is warning payday lenders that they can’t promote using loans to pay for unnecessary expenses and they can’t tell consumers how quickly they can get cash. There has been an increase in TV ads that are catchy and they seem to show how easy it is to take out a loan or they are showing examples of what the money should not be used for. The FCA is reminding the firms that this is an illegal practice.

There are regulations on this. The FCA guidelines, in full partnership with the Broadcast Committee of Advertising Practice (Bcap), state that a payday lender can’t encourage people to borrow money for certain types of bills, or what is known as frivolous spending. Some of these lenders continue to push the boundaries on these rules.

There are many hard working families across the UK that are looking for a little extra cash to pay for that shopping trip or the holiday. The government states that a payday lender can’t create an advert that encourages people to borrower from them to pay for those costs. Companies need to be very clear on the cost of doing this, which some of these ads are not showing.

High cost payday loans should never be used for those types of needs. It is both irresponsible for a family to borrow money for those types of bills, and it is also not responsible for a firm to promote this form of cash for those needs. The guidelines also state that adverts can’t encourage people to borrow money for ongoing financial concerns. This is a serious matter and a TV ads may not show all the risks to the person if they were to do this.

While the FCA guidelines are not always clear and can be interpreted different ways, the Broadcast Committee of Advertising Practice reminds companies as well as broadcasters to be cautious. For example, some people may consider using a payday loan for car repair as essential, as it prevents them from getting to work. But if the TV ads do not show this in the correct context, then it may be illegal.

Another issue is payday firms that tell people how quickly they can get cash from a loan. The Financial Conduct Authority guidelines also state that this can’t be emphasized by an ad.

Much of these guidelines from the Financial Conduct Authority as well as Bcap and Advertising Standards Authority (ASA) Council are still new. Whether it is allowed or now can often come to how the advert is phrased. Such as if one said “I borrowed money to fix my car to get to work as may pay day was a week away”, that may be acceptable. But if another ad said “I received money within 24 hours for transportation”, that will not meet the guidelines.

There should also be no ads from companies such as Payday UK or Money Shop stressing children or those under age borrowing money. If a payday company aims to offer their services to these individuals, that is not in line with the FCA guidelines.

It is recommended that both payday firms and broadcaster be conservative in what ads are created or shown on TV. If there is any question, it is safe to not to show it. Or consumers or companies that are involved in the advertising business can always contact a third part such as ASA to either make a report, or ask for their advice.