Payday loan ads banned in Plymouth

Posted by Jessica Searle in Banking on 29 July 2013 - Jessica worked as a Credit Analyst at checkmyfile until 2013

Following the decision by Cheshire East Council to ban access to payday websites from its computers, Plymouth City Council has taken this one step further by banning use of billboard and bus-stop advertising within its jurisdiction.

There are an estimated two million people nationally making use of such types of credit, with Plymouth City Council estimating that 5,000 of those individuals are residing in its city. This decision has come after the Labour-led council has seen an increase in their advice agencies taking calls regarding the hardship caused by debt.

Chris Penberthy, the cabinet member for community development, says, "Plymouth's advice agencies are taking calls daily from people who are running up huge debts that are causing stress and hardship to them and their families. We need to protect people and make it difficult for payday loan companies to operate in our city."

Across the entirety of the council's computer network, which includes those at libraries and community centres, 50 of the most popular payday loan websites will be blocked. Agreements have also been made with commercial partners across the city to cease the advertisement on public billboards and bus shelters.

Penberthy has expressed his hope that other local authorities will follow suit, expressing a desire that this will make the services offered by credit unions as a more “affordable lending option for people that won't trap them with massive interest rates".

A Money Advice co-ordinator for Citizens Advice in Devon and Cornwall says, "It's difficult to overestimate the harm payday loans are causing to Plymouth residents. The Citizens Advice Bureau is seeing an ever increasing epidemic of despair caused by these unscrupulous merchants of misery. Plymouth City Council's initiative is really welcome and represents a constructive first step in combating the unacceptable face of the financial services industry."

This has obviously been met by fierce resistance by representatives of the payday lenders, many accusing the council of denying customer's a free choice. With 85% of payday customers encountering little or no difficulties in paying back their loans, as claimed by Russell Hamblin-Boone, chief executive of the Consumer Finance Association.

He adds, "The council is effectively denying choice to local residents without fully understanding either the short-term lending industry or the way people are managing their finances in 2013... the council's belief that the loans are detrimental to those that take them is misplaced and not based on evidence."

The council's actions have been taken as an assumption of the actions the Financial Conduct Authority may take upon assuming regulation of the payday loan industry in April 2014. The FCA has expressed concerns particularly concerning the targeting of high-cost loans to students and young people, and other at greater risk. Although as of yet out-right bans of adverts has been described as a 'quite extreme' option.

Although the council will not have control over all of the billboards within Plymouth, and payday loan adverts will not completely disappear, it is the first council in the country to take such action – though highly unlikely to be the last.

Jessica Searle is a Credit Analyst at checkmyfile and has a degree in English Literature from the University of Exeter. You can contact her at jessica.searle@checkmyfile.com

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