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You can find the current article at its original source at http://www.guardian.co.uk/money/2013/mar/06/payday-lenders-advertising-clampdown
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| Version 1 | Version 2 |
|---|---|
| Clampdown on payday lenders | Clampdown on payday lenders |
| (25 days later) | |
| Payday loan companies will face new restrictions on how they advertise, and be forced to share information about applicants, after a government-commissioned report found that consumers are being harmed by serious problems in the sector. | Payday loan companies will face new restrictions on how they advertise, and be forced to share information about applicants, after a government-commissioned report found that consumers are being harmed by serious problems in the sector. |
| The market for high-cost short-term loans has boomed in recent years, driven by the recession and an increasing number of firms offering fast borrowing at interest rates of 4,000% and higher. As the industry has grown, so have concerns about debt, with one advice charity reporting it had seen problems with payday loans double in 2012. | The market for high-cost short-term loans has boomed in recent years, driven by the recession and an increasing number of firms offering fast borrowing at interest rates of 4,000% and higher. As the industry has grown, so have concerns about debt, with one advice charity reporting it had seen problems with payday loans double in 2012. |
| The government, which has been under pressure to take action against payday lenders, will work with the Advertising Standards Authority and the industry to make sure adverts for the loans do not lure consumers into taking on borrowing that is not right for them. | The government, which has been under pressure to take action against payday lenders, will work with the Advertising Standards Authority and the industry to make sure adverts for the loans do not lure consumers into taking on borrowing that is not right for them. |
| Lenders could face limitations on the number of TV adverts they are allowed to screen in an hour and the times of day they can advertise. They could also be forced to make sure their annual interest rate (APR) is displayed properly on all advertising. Currently some payday lenders advertise in prime time slots during family shows. | Lenders could face limitations on the number of TV adverts they are allowed to screen in an hour and the times of day they can advertise. They could also be forced to make sure their annual interest rate (APR) is displayed properly on all advertising. Currently some payday lenders advertise in prime time slots during family shows. |
| The government will also force lenders to talk to each other and confidentially share data on applications so that people can't take out several loans at once from different lenders. Recently, the charity National Debtline said it had heard from clients with more than 10 payday loans against their names. | The government will also force lenders to talk to each other and confidentially share data on applications so that people can't take out several loans at once from different lenders. Recently, the charity National Debtline said it had heard from clients with more than 10 payday loans against their names. |
| The news comes ahead of the publication on Wednesday morning of the results of a year-long review of the market by the Office for Fair Trading and a report by the University of Bristol on whether a cap in the cost of credit could protect consumers. | The news comes ahead of the publication on Wednesday morning of the results of a year-long review of the market by the Office for Fair Trading and a report by the University of Bristol on whether a cap in the cost of credit could protect consumers. |
| Some campaigners have suggested that such a cap would prevent some of the worse practices in the industry, while others have called for better affordability checks, and a ban on the use of continuous payment authorities, which allow lenders to keep trying to collect missed repayments from a borrower's debit card. | Some campaigners have suggested that such a cap would prevent some of the worse practices in the industry, while others have called for better affordability checks, and a ban on the use of continuous payment authorities, which allow lenders to keep trying to collect missed repayments from a borrower's debit card. |
| The University of Bristol report suggests that a cap on credit is not the right approach now, but the government has committed to allowing the new financial regulator to introduce a cost cap at a later date. | The University of Bristol report suggests that a cap on credit is not the right approach now, but the government has committed to allowing the new financial regulator to introduce a cost cap at a later date. |
| A consultation on the other powers the new Financial Conduct Authority (FCA) will have when it takes over regulation of the sector from the OFT in April 2014 will also be published on Wednesday morning. It will be able to impose unlimited fines on companies which break the rules, and to get consumers' money back where they have been mistreated. | A consultation on the other powers the new Financial Conduct Authority (FCA) will have when it takes over regulation of the sector from the OFT in April 2014 will also be published on Wednesday morning. It will be able to impose unlimited fines on companies which break the rules, and to get consumers' money back where they have been mistreated. |
| The business minister, Jo Swinson, said: "We recognise that stronger powers are needed to crack down on unscrupulous behaviour." | The business minister, Jo Swinson, said: "We recognise that stronger powers are needed to crack down on unscrupulous behaviour." |
| Appearing on BBC Breakfast, she said of the FCA: "That is going to be a body that has much stronger powers to be able to ban certain products, and to be able to stop lenders entering the market if they can't prove they have a sound business model and are going to act responsibly – and they've also got the power, if necessary, to set an interest rate cap. | Appearing on BBC Breakfast, she said of the FCA: "That is going to be a body that has much stronger powers to be able to ban certain products, and to be able to stop lenders entering the market if they can't prove they have a sound business model and are going to act responsibly – and they've also got the power, if necessary, to set an interest rate cap. |
| "Although the evidence at the moment doesn't point to that being the best solution because, actually, some of the biggest problems are things like not having proper affordability assessments done so the people that should be getting debt advice are ending up getting more debt instead. | "Although the evidence at the moment doesn't point to that being the best solution because, actually, some of the biggest problems are things like not having proper affordability assessments done so the people that should be getting debt advice are ending up getting more debt instead. |
| "This is going to be a very strong regulator." | "This is going to be a very strong regulator." |
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