Payday Loan Advertisements

Baroness Howarth of Breckland Excerpts

Tuesday 21st July 2015 Lords Chamber

[Baroness Shields]

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.

[Baroness Howarth of Breckland (CB)]

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?

[Baroness Shields]

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.