You have to hand it to them – payday loans companies don’t miss too many tricks. And we’ve grown familiar with plenty of them.
Last year, lest we forget, Wonga was caught out targeting its extortionate rate loans towards students. In its defence, Wonga said that the page in question was out-dated and ‘gave rise to misunderstandings’. I challenge you to try and misconstrue the plain English.
Now, a television advert featuring that paragon of financial prudence, Kerry Katona, has been banned by the Advertising Standards Authority for luring customers into high-cost loans – over three months after it launched across 26 channels.
The advert for payday lender Cash Lady sees Katona, declared bankrupt for unpaid taxes in 2008, refer to her own financial troubles before promising ‘Fast Cash for Fast Lives.’
Yep – that’s right. A ‘celeb’ whose discharge from bankruptcy took over three years while she allegedly continued to live in the wealthy climes of Surrey is promoting loans at an extortionate annual rate of 2,760%.
Not only that, but the brand’s spiel is all about impulsive and slapdash decision making.
You could see your bank and fill in loads of forms, but is there an easier way to get a loan… with cash lady it’s simple to apply for up to £300. It’s dead fast too. If you’re approved, the money goes straight into your account… Fast cash for fast lives.
The company says that she’s a relatable figure because of her financial difficulties and that mentioning these past problems was in no way encouraging customers to follow her example. Evidently, it didn’t consider (or perhaps didn’t notice) the ironies.
On the face of it, Cash Lady and Katona belong to each other. But neither belong on British TV.
The Advertising Standards Authority upheld 29 complaints that the advert was misleading and banned it from appearing in its current form.
Who’s in charge of what?
But herein lies a wider problem, which is the ability of firms to slither undetected, chameleon-like, between regulators. This is made possible by the distinct lack of clarity about who is responsible for what, and which set of standards are being used.
Payday lenders are regulated by the Office of Fair Trading (OFT), which, until recently, had encountered a number of difficulties in taking decisive action against them.
On its website, the OFT lists a set of credit advertising regulations that came into force in February 2011 to cover print adverts, television, radio, internet content, and telephone canvassing.
But how effective are these, in practice? The OFT could only be consulted on one of the four issues raised about the advert, despite the firm it promotes falling under its remit. Incidentally, this was the only complaint that was rejected.
The remaining issues – matters of ‘interpretation’ – come down to the BCAP code from the Committee of Advertising Practice, which the Advertising Standards Authority follows to rule over issues relating to misleading advertising and social responsibility.
One supposes that the Office of Fair Trading could refer adverts it suspected of breaking broadcast guidelines to the Advertising Standards Authority. But that’s clearly not what happened in this case.
And the monitoring of advertising in the personal finance market branches out further still.
This is Money has today identified a shocking number of inaccuracies in a number of mortgage adverts. Here, it’s the new Financial Conduct Authority which is now responsible for checking the accuracy of financial promotions. But this has so far failed to show its hand, allowing errors to go uncorrected.
So, between the FCA, the OFT, and the ASA, working to the BCAP code and Consumer Credit Directives, it’s becoming increasing difficult to know who’s in charge of what in the world of financial advertising, and to what standards advertising output is being held.
What’s not difficult to work out is that it’s currently failing, and that punters are policing it better than anybody else.