UK councils look to ban payday loan billboard advertising

Several councils are considering banning billboard advertising from payday loan providers in the wake of a recent move by Plymouth city council to bar adverts from companies such as Wonga from its city centre hoardings.

Cheshire East and Medway council are among several councils looking to follow Plymouth's lead as they take steps to protect people from accumulating high levels of debt.

Many payday loan companies charge interest rates of over 5,000 per cent APR.

Following calls to do so from Labour councillors, Medway council is looking at banning payday loan adverts in its city centre and is taking legal advice over whether this is possible.

Michael Jones, leader of Cheshire East council, said it was considering introducing a bylaw to ban advertising by payday loan providers to prevent consumers getting deeper into debt.

"As a council, we feel the rates of interest are immoral," he said.

Cheshire East has already banned access to payday loan websites from computers at its public libraries in an initiative that has been copied by a number of other councils including also Liverpool and Manchester City councils.

Many councils are combining their crackdown with initiatives to support credit unions, mirroring initiatives outlined by the Archbishop of Canterbury who has promised to allow credit unions to set up on church property.

Earlier this year the Office of Fair Trading referred the UK's £2bn payday loan industry to the Competition Commission after it found serious problems in the way the sector markets its loans. It found that, instead of highlighting the cost of short-term loans, most lenders advertised the speed at which loans could be granted.

The Financial Conduct Authority has indicated that advertisements for payday loans could be banned next year when it takes responsibility for the sector.

Russell Hamblin-Boone, chief executive of the Consumer Finance Association, which represents many payday lenders, said: "Local councils are clearly entitled to take any action they deem necessary and we would support any initiatives that drive out irresponsible lenders. However, we are concerned that, without evidence of its impact, these actions prevent people having access to responsible credit providers."

"Responsible lenders explain the costs up front in pounds in pence; use credit reference agencies to check your details and will not lend to you if they think it will make your financial situation worse."

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