A ban on allowing payday lenders to advertise their products has not been ruled out by the UK government.
Baroness Wilcox, parliamentary under-secretary for the Department of Business, Innovation and Skills (BIS), said the government was considering all options around making payday loans more transparent.
In response to the question of whether payday lenders and other high-cost credit providers should be banned from high-profile display advertising, Baroness Wilcox said:
“We are looking at all options. It is difficult to take away the opportunity for people to have access to the things they need, so we will need to tread very carefully.”
Baroness Wilcox also argued that the high APR rates advertised with payday loans should be replaced with the total cost of credit.
“There is no doubt the APR should be replaced with the total cost of credit. APR is not the clearest way to show payday loans as they are,” she added. “People borrow this money for short time and the information they want is: how much it will cost for the short time they will borrow it.”
She also expressed surprise that credit unions, often cited by payday loan critics as a sustainable borrowing alternative for low income consumers, had not enjoyed the same popularity in the UK as they had in other countries.
The government has commissioned Bristol University’s Personal Finance Research Centre (PFRC) to carry out research into the impact of introducing a variable cap on the total cost of high-cost credit that can be charged in the short to medium-term high-cost credit market.
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