Consumer Rights Bill

Baroness Benjamin Excerpts

Wednesday 26th November 2014 Lords Chamber

[Baroness Drake (Lab)]

My Lords, I support Amendment 47. The findings of the different charitable organisations about the prevalence and impact of payday loans are rather chilling and depressing. I will not deploy all the statistics referred to by noble Lords today and in Committee other than to re-stress that Ofcom’s findings show that 80% of payday loan adverts are shown before the watershed. The Children’s Society has found that 55% of children aged 13 to 17 recognise the name of at least three payday lenders—I would have been distressed if my children had known that information at that age—and that parents aged 18 to 24 years increasingly see payday loans as a normal means of money management: almost 40% of them have used payday loans at some point. That is all illustrative of a serious problem.

As many noble Lords have articulated, the characteristics often revealed by people who take out payday loans are all too familiar. A high proportion of borrowers experience financial distress, many come from less well off socioeconomic groups, and few have assets. A significant number of borrowers have two or more loans, which exposes them to unsustainable and spiralling debt. Many borrowers get these payday loans to cover basic needs, including the needs of their children, yet many are in acute repayment difficulties. According to the CMA, more than one-third of loans were not repaid on time or at all, which often brings considerable consumer harm relative to the amounts that were borrowed in the first instance.

Successfully addressing the problem of high-cost credit requires a multifaceted approach and, as my noble friend Lord Mitchell acknowledged, much action has already been taken by organisations such as the FCA. However, taking steps to protect children from exposure to advertising for high-cost loans, which is both ill suited for the children and corrosive in its impact upon parents and families as a whole, is an essential ingredient of that multifaceted approach.

Children exposed to particularly suggestive loan adverts pressurise their parents to take out those loans to buy things. Yet we know that families trapped in problem debt are more than twice as likely to argue about money problems, which leads to stress on family relationships and causes emotional distress to the children. Many noble Lords have referred to pester power, which arises from children’s exposure to payday loan advertising. However, the potency of that power is so great because people love their children. If you are on a low or modest income, it is very hard to say no to your children if they are missing out on social activity or feel disadvantaged in comparison to their school friends. How much harder it is at Christmas to say no to the children you love, when you have no money and your children do not understand why they cannot have something in their stocking when you just need to respond to those funny furry grannies who are offering you some money.

Pester power has a powerful emotional pull on parents, and the advertising has such a powerful impact on the children. This advertising masks a business model that is based on exercising great persuasive power on low-income households and their children. There is a continuing need to address the behaviour of firms in this high-cost consumer credit market. These companies have substantial funds for marketing and advertising. That allows them to have great persuasive power over vulnerable people and their children. The prevalence of the advertising has an impact on many people’s choices. In the short term, there are the effects of pester power and increased debt; in the longer term, people see credit as the normative solution to managing their finances.

Even on the FCA’s own analysis, after the cap is introduced the proportion of borrowers who experience financial distress as a direct result of taking out payday loans is expected to remain as high as 40%. Notwithstanding the positive actions taken to date by bodies such as the FCA and the Advertising Standards Authority, there is still a clear and compelling need to send a strong and clear message by placing in statute the responsibility of high-cost lenders to run their advertising appropriately. If the advertising of alcohol and gambling can be heavily regulated to help prevent the normalisation of alcohol abuse, why on earth would one not want to take the fullest action to prevent the normalisation of the potentially harmful behaviour of taking out loans that are unaffordable and get you and your family into debt?

As the noble Lord, Lord Alton, referenced, the sheer quantity of adverts for payday loans seen by and impacting on children, young people and their parents made me shudder when I saw the figures. In 2012, 596 million adverts were seen by children compared to 3 million in 2008. If that is not an aggressive business plan, I do not know what is. That is 200 times more adverts over four years. Some organisations will quote aggregate statistics to seek to state more modestly the level of payday loan advertising, but we should remember that the charitable organisations are so concerned about this because they see and measure the concentration of risk from these adverts on vulnerable families. Never mind the aggregate figures: my children and I are not vulnerable to payday loans, because I have a good income. It is the concentration of risk from these adverts on these children and these families that poses the great risk. We need to remember that what may be a small amount taken out in a loan that is borrowed for a pressing purpose becomes a much bigger debt if the loan is not repaid.

The current advertisements, which other noble Lords have referred to, contain jolly characters. They can appear funny or appealing; they have catchy jingles. In fact, they have lots of characteristics but usually not the obvious characteristic, which is to make absolutely clear that they are presenting a very serious form of credit with high risk. An advert can have a cuddly granny, but it will not spell out the risk to your family if you pester your parents to take out such a loan.

Of course, children watch programmes and adverts in other ways and at other times. People are changing their viewing habits and watching programmes on laptops, tablets and iPads. That, too, needs to be addressed. Protection for children needs to be modernised, but that is not an argument against the watershed period remaining sacrosanct for as long as possible and keeping those adverts away from children before the watershed. This really is a compelling amendment.

[Baroness Benjamin (LD)]

My Lords, I rise very briefly to support the amendment, as in the past I have spoken in support of this issue in the House. I am also supportive of the Children’s Society “The Debt Trap” campaign, which seeks to protect children from payday loan adverts by banning payday loan advertising before the 9 pm watershed.

As we have heard, Children’s Society research reveals that too many children are frequently seeing irresponsible payday loan adverts, which in the long term can have an influence on their financial education and attitudes towards debt. I believe that children should learn about borrowing and money in a responsible way—and also about the consequences that borrowing can bring—not from the irresponsible way in which payday loan adverts on television are performed. They can often be very funny animations with seductive, very popular, “can’t wait to see again” adverts.

It is crucial that we protect children from unsuitable advertising before the watershed, in the same way that we have legal restrictions to protect children from gambling, alcohol and junk food advertising. I believe that that will put a stop to the damage that debt does to children’s lives and beyond—long into their adult lives. I very much look forward to a positive response from my noble friend the Minister on this very important amendment.

--- Later in debate ---

[Lord Harris of Haringey]

My Lords, the noble Lord, Lord Stoneham of Droxford, has just made one of the most extraordinary series of arguments against the amendment of the noble Baroness, Lady Howe. He seems to suggest that because filtering systems are imperfect it would be better not to require filtering systems to be in place in the first instance. We all recognise—the noble Baroness, Lady Howe, made this clear when she introduced her amendment—that this was just one of a number of things that need to be done. However, the concept that because there is not perfection in the art of filtering out pornographic, violent or dangerous images, therefore you should not attempt to do it, seems a particularly bizarre position to take.

The noble Lord also suggested—and I have read carefully the amendment of the noble Baroness, Lady Howe—that if we were not careful we would criminalise children who found their way past these filters and their parents for not adequately protecting them. However, there is nothing in the amendment which creates a criminal offence for a child to try to get past a filter.

The amendment is about creating a sensible framework so that the internet service providers have an obligation to put the filters on as a default—that is essentially what this means—and that there should then be a series of hurdles that have to be passed before that default filter is removed. It also requires Ofcom to promote best practice, to set standards in the way in which the filter operates and to develop an age verification policy. This is long overdue not only in this area but also in other areas where children need to be protected or adults need to be prevented from accessing material which is only for children, which is the other side of the same coin. All of this is eminently sensible material.

The Government think that this is not necessary because self-regulation operates so wonderfully. The problem with self-regulation in this instance is that although the three or four most responsible internet service providers may take these steps and do what is necessary, the others will not. The noble Baroness, Lady Howe, cited the example of the internet service provider that, in its promotion material, makes a positive virtue of the fact that it does none of these things. It is essentially saying, “Come to us because there are no safeguards whatever”.

I hope the Minister will either accept the amendment or agree to have urgent discussions with the noble Baroness, Lady Howe, and those who are advising her on this issue to see whether it is possible to develop something that meets these requirements. It is quite clear that we are not taking seriously the fact that children are accessing extremely nasty and dangerous material. The noble Baroness, Lady Howe, gave some sad, tragic and awful examples of where children have acted on such material. We know that children and teenagers act impulsively. The brain development has not yet occurred which enables them to give proper consideration to and have understanding of the consequences of their actions and what that means.

Under those circumstances, not trying to create the safest possible environment for them, and not trying to create a situation in which the default starting position is that filtering systems are in place, even if some of them are not as good as they might be, is completely irresponsible. I hope the Minister will tell us either that the Government are prepared to accept this principle or, if they have some difficulties with the way in which this is presented, agree to have urgent discussions with the noble Baroness to try to put this matter on track.

[Baroness Benjamin]

My Lords, I have put my name to Amendment 50D because I am concerned about the easy accessibility of adult material to children online. It is that simple. Recently, a parent contacted me to inform me about their eight year-old son who was, quite innocently, led into accessing many pornographic images, unknown to them. They have now activated a block which bars such material, but, like so many other parents in this country, they wish it had been on by default. Their son now has unwanted memories of what he saw popping into his mind. Childhood lasts a lifetime and those early memories will lay the foundation that stays with that child for ever. They cannot be erased. How can we sit back and let that happen?

This year, the Authority for Television on Demand published a report entitled For Adults Only? which revealed that, in the space of just one month, at least 44,000 primary school children and more than 200,000 under-16s accessed adult content, including hardcore pornography. If we are serious about caring for our children, we must do far more to protect them online before more tragic, heartbreaking, life-damaging sexual, mental and emotional abuse takes place. There is a series of problems with the current voluntary approach deployed to keep children safe online. These are all addressed by Amendment 50D.

I congratulate the Government on all the progress they have made on this issue but, as has been said before, more needs to be done. In terms of internet service providers, the current voluntary approach to default adult content filters is inadequate and does not constitute a credible, long-term solution, for several reasons. It leaves 10% of the market uncovered. This represents several thousand children. It fails to provide any form of age verification before someone seeks to opt in to access adult content. You have to do this before you access gambling and other online activities, why not for accessing online pornography? It involves different companies applying different standards about what does and does not constitute adult content, so there is no consistency. Children like consistency. It helps with their development. There is no central mechanism for efficiently addressing the problem of overblocking. No one wants to block unnecessarily.

There have been two high-profile cases, as we have heard, of mobile phone operators not abiding by their code: BlackBerry and Tesco Mobile. The operator Three does not even claim to be compliant with the code. This is what self regulation allows. All these problems are addressed by Amendment 50D. I hope that my noble friend the Minister will give careful consideration to this amendment and I look forward to her response, in the hope that it will show that the Government truly care about our children’s holistic, long-term well-being.

[Lord Cormack (Con)]

My Lords, I will be very brief. I put my name to this amendment. I am also speaking later in the debate secured by the noble Baroness, Lady Boothroyd, which I do not wish to delay unduly. I put my name to this amendment because there is no greater crime than the destruction of childhood innocence—and we are in danger of doing that on a very large scale indeed.

I believe that the day will come when we make the provision of pornographic services online a criminal offence. No one benefits from watching them, whatever his or her age, and I think that they tend to deprave—but I am absolutely convinced that our children must be protected. Speaking as a grandfather and as one who has many friends who have younger children, I do not like to think of the future into which they are growing up, in which they are led to believe that it is better to have 100 virtual friends than one real one and that whatever they watch does not really matter because it cannot change their character. It can, as the noble Baroness indicated in her speech. It is for that reason that I support the amendment.