Consumer Rights Bill
Debate between Baroness Wilcox and Baroness Jolly
Baroness Wilcox
I will just add a word at this stage. I am very interested to hear what the Minister says about what the noble Lord, Lord Kennedy, has described, with the money all going into a fund somewhere else and people not getting their hands on it. I winced slightly, because I thought, “The Minister is listening to somebody talking about ring-fencing here”. I wondered how she was going to respond to ring-fencing money like this; I am not quite sure. The Financial Conduct Authority, as I understand it, is this big, new strong regulator that the Government brought have in, so I wondered if the Minister was going to tell us the result of the consultation paper they put out fairly recently. I have not heard too much about that since.
Baroness Jolly
I am grateful to the noble Lord, Lord Kennedy, for raising the issue of payday lenders’ advertisements targeted at people engaged in gambling. The noble Lord, Lord Stevenson, asked how he knew about these things. The answer could be that he had inadvertently fallen into the debate on the gambling Bill, where this sort of thing was raised. We can therefore tell the noble Baroness that there was nothing untoward going on.
As I have outlined previously in this Committee, the Government are fundamentally reforming regulation of the payday market through the Financial Conduct Authority’s new, more robust regulatory system. In January, the FCA will introduce a cap on the cost of payday loans, to protect consumers from unfair costs. The Government are determined to tackle abuse in the payday market wherever it occurs, including in the marketing of these loans. We strongly agree with the noble Lord that it is unacceptable for payday lenders to deliberately target vulnerable consumers with their advertising material. However, it is clear that a robust set of measures is already in place to protect the vulnerable from such practices.
We have heard about the FCA, but payday loan adverts are also subject to the Advertising Standards Authority’s strict content rules. Those apply to broadcast, as well as online, advertising. The ASA enforces the rules set out by the UK code of broadcast advertising. The BCAP code requires that all adverts are socially responsible and that vulnerable people are protected from harm. The social responsibility requirement prohibits lenders from deliberately targeting vulnerable people such as problem gamblers. The ASA has powers to impose scheduling restrictions if it deems it necessary. It also has powers to ban adverts which do not meet its rules, and has a strong track record of doing so: since May 2014, the ASA has banned 12 payday loan adverts. Just today, the ASA banned a payday advert because it encouraged consumers to take out loans to fund frivolous spending. The FCA has introduced tough new rules for payday adverts, including the introduction of mandatory risk warnings and the requirement to signpost to free debt advice. The FCA also has power to ban misleading adverts that breach its rules.
To conclude, there is in place a tough package of measures to ensure that vulnerable consumers are protected from inappropriate advertising and communications from payday lenders. I hope that that gives the noble Lord some comfort. To pick up on a point made by the noble Baroness, Lady Wilcox, the consultation paper on the cap will be published next week, before Report. I hope that the noble Lord now feels able to withdraw his amendment.