Payday loan companies are “grooming” children to become the next generation of borrowers, and they should be banned from advertising on children’s TV programmes and channels, one of the UK’s leading financial advice experts stated.
According to Moneysavingexpert’s founder Martin Lewis, one in three parents of children 10 and under say their kids already know payday ad slogans.
Furthermore, almost 15 per cent claim that their children have urged them to take out a payday loan whenever they do not buy them something they want.
The “lax rules” and lack of regulation for payday loan advertising has resulted in an increased risk of “injuring a new generation to the dangers of these loans of last resort,” Lewis said.
Lewis’s decree coincided with the grilling of large payday lending execs, such as Wonga, by MPs belonging to the Business Select Committee.
“The Wonga economy is one of the worst symbols of Britain’s cost of living crisis,” tweeted Labour leader Ed Miliband.
Lewis stated that payday loan ads make payday loans look like something fun “rather than a hardcore form of debt.”
He continued by saying ads for payday loan companies should not be allowed to air on children’s TV programmes and channels, and the nature of their advertising content should be restricted.
In a recent statement, the money expert proclaimed, “Where adverts are permitted, they need to include a string of wealth warnings to ensure the fun is taken away.”
Lewis added, “Now these lenders are essentially grooming children to be the next generation of borrowers. The current explosion in the number of people borrowing in this way is nothing compared to how the next generation will act.”
“Payday lenders are now so profitable, they have huge advertising and film budgets which bring in more customers, making even more profit. That’s why we need legislation or regulation to disrupt this market.”
Wonga was one of three large payday lenders being investigated by MPs. In a statement to ITV News, Niall Wass, chief operating officer of Wonga, said Wonga was an ethical company, and he issued a challenge to the Archbishop of Canterbury and other critics to use his company’s services before criticising it.
Wonga and other leading payday lenders have consistently claimed their fees are much more transparent than the confusing and “exorbitant” overdraft fees being charged by banks.
The Archbishop and other critics claim payday lenders seek to trap Britons in a perpetual debt cycle by encouraging them to rollover their loans.
Meanwhile, Consumer Minister Jo Swinson said a “huge amount” has been done already to clean up the payday lending sector.