The payday loan industry has been placed under a microscope in the United Kingdom. Policymakers are concerned that these short-term, high-interest loans send the most vulnerable into financial destitute. This is why the Financial Conduct Authority (FCA) has rigorously been reining in the industry since 2013.
But one Liverpool attorney wants the government to take one step further: ban payday loan ads.
For years, one of the common concerns among British officials and households is the ubiquity of payday loan advertisements seen on television, especially when they’re aimed at the youth and unemployed.
Last week, the Liverpool government’s announced that it would start to review marketing schemes launched by gambling organizations. Solicitor Sean Rogers is now urging public officials to also initiate a review in the advertising practices of payday loan businesses that can harm youths.
Rogers, who is head of Refund You Solicitors, a group that helps young people get compensated for being misled on payday loans, says daytime advertisements from businesses who offer personal loans are a big problem that many young people come across. This is a time when payday loan commercials are more prevalent than at any other time.
He told the Liverpool Echo that there are numerous scenarios where payday loan businesses approve applications submitted by “vulnerable people” without proper background checks and procedures to determine if the potential customer can actually pay back the principal sum and interest charges.
“In many cases, the lenders did not stop to question whether a young person could afford the repayments once other commitments were taken into consideration,” he said. “Loans were dished out to young people, many of whom may have already had a poor credit history. “In many cases this leaves people in dire financial straits because they were locked into loans with very high interest rates with no hope of paying it back.”
Ultimately, Rogers is requesting that the government begin to turn its attention to pre-watershed payday loan advertisements and not just gambling commercials. By doing this, he says, more young people will not fall for the false claims being perpetrated by payday loan facilities that make grandiose promises.
Earlier this year, it was reported that nearly half of young people use payday loans. And, in Great Britain, according to the Financial Ombudsman Service, those between 25 and 34 years of age are far more likely to use payday loans and issue complaints pertaining to payday lenders.
Why are millennials utilizing payday loans? Their bank accounts are overdrawn, their credit cards are maxed out, their expenses are getting out of control, student debt is immense and the cost of living remains high. Simply put: payday loans serve as their final pecuniary resort.
“They have already maxed out everything else and so they’re going to behavior that’s deemed even riskier,” said Shannon Schuyler, PwC’s corporate responsibility leader, in a statement.
Many are warning that at around this time of the year, with the Christmas season approaching, you are going to see an uptick in the number of households, both young and old, taking out payday loans.