Lord Mitchell (Lab): My Lords, I have not previously spoken on this Bill. I support Amendment 105B. If I never do anything else in your Lordships’ House, I must do that, because this payday loan issue has been quite beyond my comprehension. Starting three years ago, when nobody was paying any attention to it, and the Government, frankly, were quite indifferent, we have moved the debate on. I give the Government credit for changing their mind on this and being highly supportive, enabling us to get to the point that we have reached today.
I never expected the FCA to be so strong and definitive, and to introduce controls which have had the effect they have. Frankly, I thought that the authority would roll over, and I am really pleased that it has been successful. It is saying that within a year or so perhaps 95% of these payday lending companies will be withdrawing their services.
But the outstanding issue is the one of advertising. When I talk to people about payday lending, I will sometimes say something to them that they do not quite understand. It is that I have more regard for people who go into the pub to borrow 50 quid from some really nasty characters, knowing that if they do not pay it back, they are going to lose a kneecap or something like that. At least they know the name of the game. I am not backing it, but I am saying that that is how it was. What has happened is that today this kind of lending has become cool and sophisticated. You can have an app on your iPhone and suddenly it is part of the way of living for many people. There is no shame associated with it; it is just something that can easily be done, and the advertising element of it is quite important.
We have to understand that companies like Wonga have phenomenal sums of money to spend and they use the most sophisticated advertising they can to get to the people out there. I remember being told in correspondence I had with the trade association—and indeed I have heard Wonga say this—that the industry does not target children. It makes sure that there are no advertisements around children’s programmes. That is a typical approach on the part of Wonga, but it is a total lie. It is a lie because many families in this country have the television on all the time. I believe that the average family watches television for six hours a day. The TV is on when the kids come home from school and it is on in the holidays. They do not really pay attention to every programme, whether it is a children’s programme or not. If it is not a children’s programme, that is when the advertisements are aired, and children can see them. They see the puppets, as the noble Baroness, Lady Howe, mentioned, and they can sing the ditties. They think that it is tremendous fun. What children then do is put huge pressure on their parents, so that when a parent says, “You can’t have a new pair of trainers”, the answer is, “Wonga will give you the money for them”. That is the sort of pressure which continues to be exerted and it is why it is easy for people to get into this loan situation.
I have a Private Member’s Bill before your Lordships’ House. It is two pages long. This particular amendment is summarised in five lines. I think that it is probably as
good as we can get—I think that it is really good in fact. I am very keen to support it and I encourage noble Lords to do the same.
Baroness Bakewell of Hardington Mandeville (LD): My Lords, I rise to speak in favour of Amendment 105B and the other amendments in this group. I spoke about this issue at Second Reading and I have not changed my mind about it, but I will try not to repeat the arguments and the statistics that other noble Lords have cited.
The quality of childhood is under attack from all sides: the sexualisation of childhood through scantily clad pop stars deliberately targeting the younger generation; the fear of paedophiles making parents reluctant to allow children the freedom that I enjoyed as a child when roaming over nearby fields with my friends; the intrusion of digital games and equipment, forcing out healthier childhood pursuits; and, unfortunately, cyberbullying via smartphones. All these conspire to put pressure on children so that what should be a carefree childhood is often turned into a race and a competition for the latest gadget or fashion garment.
During my children’s younger years, one of the more enjoyable activities during a busy day was to sit down with them and watch the children’s programmes that were on at lunchtime and again at their tea time. Many of these, especially the lunchtime ones, were cartoons and puppets. I am sure that many of us can remember the delights of “Postman Pat”, “Camberwick Green” or “Pigeon Street”—but I fear I show my age. While watching their favourite television programme, children should not be subjected to propaganda from high-cost consumer short-term credit companies or, as they are known, payday loan companies. As has been said, these adverts give the impression that applying for such a loan is commonplace, and that it will solve all your problems and be easy to repay. Alcohol and gambling are not advertised during children’s prime-time TV, so why are payday loans?
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Parents, who are already under enormous pressure at a time when bringing up children—just to feed and clothe them—is expensive enough, do not need the added stress of their child saying that in order for them to have trainers like Jack’s down the road all their parents need to do is apply for a payday loan. The vast majority of parents wish to do all they can for their children and to make them happy. However, children are skilled at emotional blackmail—for some, it seems to be a skill they have been born with—and it is often difficult for parents to refuse, especially when there are so many other pressures on them. It is certainly very difficult for them to explain why such loans are not all that the adverts would have us believe.
For these payday loan adverts to be fronted by puppets, a medium children easily identify with, is unacceptable. I support the move to ban all payday loan adverts during children’s prime-time viewing. They should be moved until after the 9 pm watershed, whether they are delivered by puppets or by other means.
Baroness Crawley: My Lords, I, too, support the amendments in this group. This is a vital issue for us all. The language of children’s protection has to be modernised. We rightly rail against pornography and violence and the abusive exposure of young children to those things, but the insidious manipulation of children when it comes to the payday lending industry can no longer be overlooked or seen as a lesser evil. Those puppets are built like children’s grandmothers and grandfathers. They are authority figures that kids look up to—certainly the ones I have seen. We all know that the misuse of money, as the noble Baroness has said, can lead to terrible family misery, and we harm children—often for the rest of their lives, as noble Lords have said—if we make popular for them the notion that money can be procured cheaply, and dress it up to sound like fun or a solution to their family’s pain.
The Advertising Standards Authority, speaking about advertising rules on this subject, states that:
“The protection of young people is at the heart of the rules”.
It goes on to say that advertising “must be socially responsible”. I fail to see what could be socially responsible when it comes to payday loan advertising at usurious rates, as the most reverend Primate the Archbishop of Canterbury put it. Member states of the European Community—which I believe we still are at present—are urged by Article 27 of the audiovisual media services directive to,
“take appropriate measures to ensure that television broadcasts by broadcasters under their jurisdiction do not include any programmes which might seriously impair the physical, mental or moral development of minors”.
I suggest to the Minister that the Bill’s inclusion of this group of amendments would be an appropriate measure.
In conclusion, I read recently that the world’s top 10 PR companies, including UK companies, have said that they will not represent clients that deny climate change. What a powerful signal it would be if those PR firms and their advertisers took a similar course of action when it came to their industry being approached to procure payday loan advertisements. I urge the noble Baroness to use the opportunity of the Bill to stop this practice.
Lord Harris of Haringey: My Lords, I rise briefly to support Amendment 105B, and perhaps I may tender some advice to the Minister. I suspect that this is one of those issues that, were it to be put to a vote in the House at Report stage, it would not be a happy moment for the Government, who would oppose it. However, I am sure that the Minister supports the objectives here.
We are all clear about how wrong it is for companies to be targeting advertising material at children and to rely on pester power to deliver what they want. My reason for speaking is because I agree with everything that has been said in this debate bar about two sentences. Those two sentences were spoken by my noble friend Lord Mitchell. Although he did not mean it, he gave the impression that somehow the cuddly illegal money lender, the loan shark operating in the pub who threatens to kneecap you if you do not pay up, is somehow preferable. I do not regard the payday loans companies
as necessarily preferable, but we have to be conscious that one of the consequences of tightening up on the payday loan market will be that more people will seek recourse to illegal money lenders.
I chair the National Trading Standards Board, and one of the things we fund is the Illegal Money Lending Team for England and the Illegal Money Lending Team for Wales. Those teams are only scratching the surface of the problems that exist around illegal money lenders. They are very nasty individuals who are quite happy to squeeze money out of individuals in perhaps the same way as these corporate entities do—except that they do so using violence and all sorts of intimidation. Some of the cases that have been pursued by the illegal money lending teams are horrifying. Illegal money lenders use their power and strength to intimidate vulnerable people and families, including rape of the women concerned, beatings and other attacks. These are organised criminals who sometimes operate in small groups and sometimes as part of bigger networks. We have to be extremely cautious. When the Government accept these amendments or something similar to them either now or at the Report stage, I hope that they will look at what else needs to be done to protect the public from illegal operators as opposed to the legal ones we are talking about in this group of amendments.
Baroness Drake: My Lords, I support all of the amendments in the group, but I want particularly to speak to Amendment 105P. The mere existence of the payday loans, high-cost consumer credit market is to me a consumer detriment, particularly for vulnerable consumers who access it, but of course that is not an issue which is up for debate under these amendments. The FCA remit is to regulate markets, not to outlaw or to ban these companies. Only the Government can drive the policy needed to secure for not-for-profit affordable lenders sufficient capital liquidity to provide an alternative source of credit. Amendment 105P seeks to address the issue, because notwithstanding the regulation of payday lenders, the need for affordable credit still remains for a particularly vulnerable group of people. As I say, only the Government can drive the policy to address this issue. In the mean time, given that the payday loan market exists, the demand side has certain key characteristics with which we are all familiar. A high proportion of borrowers experience financial distress. Many will come from less well-off socioeconomic groups and will have few assets. A significant number of borrowers will have two or more loans, exposing them to unsustainable and spiralling debt.
Many borrowers get payday loans to cover basic needs, including the needs of their children, yet many are in acute repayment difficulties. According to the CMA, more than one-third of loans were not repaid on time or at all, often bringing considerable consumer harm relative to the amounts that were borrowed in the first instance. That is a demographic crying out for intrusion by the Government to create a sustainable market for affordable credit, as these people will still be vulnerable to the need for that credit. Amendment 105P turns its attention to the fact that the standing need for affordable credit for this vulnerable demographic has to be addressed by the Government.
Amendment 105P also captures the argument that the introduction of a broader levy funding base should not be a lost opportunity to significantly expand the availability of a free debt advice service. That is a compelling argument. By comparison, the new pension freedoms and choice agenda due in April 2015 comes with a guaranteed guidance service on the assumption—quite rightly—that the position of pension savers and consumers in the marketplace will be more vulnerable to poor decision-making without such guaranteed guidance. A levy is being raised from among the relevant providers of financial services which is to be dedicated to funding that guaranteed guidance.
No doubt the argument will be made that significant numbers who would benefit do not seek debt advice and that the allocation of funding to a debt advice service has to be proportionate to the demand for such guidance. My response to that is to say that the Government should take the lead in stimulating or creating the demand and the take-up for that debt advice service. I am sure that the proposed pension guarantee guidance would not be deemed a great policy success if few people took advantage of it—even more so with vulnerable people exposed to unsustainable debt and high-cost consumer credit, missing the opportunity to expand the availability and the take-up of a free debt advice service would not be a policy success. Amendment 105 in particular says that we are dealing with a particular manifestation of the need for credit. However, even in addressing the payday loan companies, the systemic problem will still need to be solved: how people can get access to affordable credit and how they can get access to and use a free debt advice service.
I should perhaps declare an interest in that I am a member of the TPAS board which is currently involved in delivering the pension guidance guarantee. Hopefully, that will not detract from the merits of my argument.
Lord Stevenson of Balmacara (Lab): My Lords, I declare my interest as the retiring chair of StepChange, the leading debt advice and solutions charity, which has already been mentioned this evening.
This has become a rather wide group of rather disparate amendments, and I worry that some of the important points that need to be made in this area might get lost. As well as dealing with the very important issues about the impact on children of payday loan advertising, the amendments in my name and that of my noble friend Lady Hayter propose measures, as we have just heard from my noble friend Lady Drake, to ensure a further clearing up of the payday lending sector as a whole. There are other amendments still to come which deal with elements that go together as part of this overall policy.
This is rather a dense set of amendments, and I apologise in advance for spending some time on the two amendments to which my name is attached, Amendments 105P and 105Q, but I think they are important. However, I do not want to lose the very good speeches that we have already heard. Somebody asked what the state of play is now in childhood. My noble friend Lady Crawley said that we have to think quite inventively about how the language of children’s
protection needs to be modernised when we are dealing with issues such as advertising more generally. Even to talk about restricting adverts in a system which is 50 years old—the watershed—is to ignore the complete change in viewing habits that we are currently living through, with people watching individual programmes in a variety of different information-gathering machines, such as tablets and iPads.
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We have a much more complex and difficult task, but the principles, which were extremely well set out by the right reverend Prelate the Bishop of Norwich, by my noble friend Lord Mitchell and by the noble Lord, Lord Alton, present the case for firmer, strictly enforced controls on what payday lenders are doing to children, not restricted to the form of advertising we are currently focusing on but not ignoring it either. We support these amendments.
On the other hand—as others have touched on—the statutory authority, Ofcom, and the non-statutory body, the Advertising Standards Authority, do a fair amount already, and we should be grateful for their achievements. However, the recent Ofcom statistics—already quoted—are quite chilling. I will just take three statistics, because some have been mentioned already. Over the past two years, when the volume of payday loan advertising has been at its highest, the majority of the spots they are paying for on television are airing between 6 am and 5 pm. Around four-fifths of younger children's viewing takes place before 9 pm, and we know that on average young people view around 1.3 payday loan ads on television each week, when they are watching about 17 hours of television. There is no doubt that the material that has been allowed to air is reaching people it should not be reaching. The consequences, as we have heard, can be difficult.
I pay tribute to the work that Ofcom and the ASA are doing. The ASA has told us that it has banned 25 ads since April 2013. This is a very small number of the total ads appearing and it will be a gradual process, largely relying on complaints and the responses to them, and will take time. The ASA makes the point—and it is a good one—that TV ads are subject to pre-clearance by Clearcast, which means that when the ASA bans an ad it sets a precedent. For example, the use of celebrities with a history of debt problems, or the suggestion that loans should be used for trivial reasons, should not be allowed in future. That gets applied in the pre-screening process. So just one ruling can have a very slow effect that can perhaps alter sector-wide practice. However, it will take so long to clean up this area that the noble Lords arguing for immediate action are very important voices.
What are we to make of the point hinted at by the noble Baroness, Lady Bakewell of Hardington Mandeville, about the ecology of advertising? The ASA told us it was worried about the watershed in a very peculiar way, which is worth airing. One of its points is that it is wary of the potential to “toxify” the post-9 pm environment. It is saying that if the majority of ads, perhaps the only ads, shown after 9 pm are going to be for alcohol, gambling, credit or other restricted products
that would otherwise be spread throughout the schedule, then there is a concentration of that “sinful” world. We can be happy that young children do not often watch after 9 pm—although in my household it does not always stop strictly on time—and in any case with the new technologies children will get around restrictions. There is an important point here, but the ASA may be overstating it when it says that it is quite possible that watersheds might even result in more viewing, and not less, of certain undesirable activities within certain groups. Be that as it may, the right thing is to get rid of these adverts using the powers we already have, so that the watershed period remains sacrosanct for as long as possible.
Turning to the two amendments to which my name and that of my noble friend Baroness Hayter are attached, the first is the one that my noble friend Baroness Drake spoke about. The free debt advice is currently funded through a compulsory levy on those lenders and financial institutions which are authorised by the FCA, and the levy is collected by the FCA. The levy is determined by the regulator and is based on the size of firms and the level of their debt write-off. Only a fraction of the over-indebted population, as we have heard, are currently getting the free debt advice and support they need. Recent research suggests that people wait as much as a year before seeking the advice and solutions they need. I do not think there is any doubt that more funding is needed in that area.
We know already that free debt advice helps to save relationships, boost productivity, improve mental health and enables people to stay in their homes. The Money Advice Trust has shown that the overwhelming majority of clients consulting the independent debt advice sector get an answer to their debt problems—92% of them said that they had benefited from a formal solution which made their debt more manageable—and other research shows that a year after seeking independent debt advice people with unmanageable debts are almost twice as likely to have recovered their situation to manageable, with the majority attributing debt advice as the main reason.
Not only individuals gain from this. Creditors gain significantly from the work of not-for-profit debt advice organisations. My charity put out a report recently on the social impact of independent debt advice which suggests that £175 million was saved for creditors each year. This comes from both improved recovery rates and reduced collection costs. The Friends Provident Foundation published research recently which suggested that creditors benefit by as much as £1 billion a year as a whole as a result of this sector.
This amendment, which is introduced because payday lending is causing widespread repayment problems, with over a third of loans issued in 2012 not paid at all according to the Competition and Markets Authority, is aimed squarely at payday lenders in the hope that we can persuade the Government that an injustice is being done if the basis under which people pay contributions to the FCA remains based simply on size and turnover.
As we have heard, payday lenders make a real intervention in a bad way to society. The result of that is a growing demand for debt advice, which places a
disproportionate strain on the advice providers. The rate of payday loan debt problems has increased. Five years ago the proportion of clients who came in to StepChange Debt Charity was about one in 50; now it is one in four. More than 66,000 people contacted StepChange debt charity for help with payday loans in 2013, double the number from the previous year.
We find that people with payday loan debt problems are typically already in acute repayment difficulties. On average, clients’ payday loan debts are £1,552, which is up a third in two years, and already exceeds the average monthly income. So there is no way in which they can repay the debts that they have.
If payday lenders cause a disproportionate level of consumer harm relative to the amounts they lend and to turnover, we think they should contribute to debt advice an amount relative to the level of detriment they cause—a kind of “polluter pays” principle. If payday lenders and high cost consumer credit firms were made to pay a levy this would significantly boost funding for free debt advice which is currently largely paid for by the traditional credit providers, for which they do not get the plaudits they deserve. As high cost credit providers only exist because there is not enough low cost credit available in society, it is right that they should also be required to make a contribution to the credit unions which provide the kind of low cost credit required but which lack the resources necessary to reach all who need it.
Amendment 105Q concerns the process under which payday lenders currently make loans. Although the new FCA regime for payday lenders is having an impact, including driving a considerable number of players out of the market—although, in my view, not quite enough—I am concerned that the FCA rules for payday lenders are not strong enough to prevent consumers from getting stuck in a cycle of high cost credit. The FCA has published plans to cap the overall cost of individual payday loans and is taking action to drive out unacceptable models. These are both steps forward which we welcome.
However, less welcome is the fact that the regulator has ruled out a limit on repeat or concurrent lending, even though this is often driving the most intractable difficulties. A growing number of problem people have been lent one affordable payday loan after another and have been pushed into a cycle of high cost debt. As the amendment suggests, a quick, accurate and comprehensive data sharing process is needed. However, the FCA is backing an industry-led, voluntary approach to the sharing of real time credit data.
The latest on this is that it expects 90% of market participants to be sharing data by the deadline later this month. That is welcome, but we believe a more prescriptive approach is needed to secure safer lending practices. Surely we need 100% of payday lenders to sign up to realtime data sharing. This is the only way to make sure that all lenders have the information on which they can make a proper affordability check. We need to ensure that the data shared is comprehensive. All lenders need to have a complete picture of a borrower’s existing credit commitments, including any recently taken out. This has to be in real time. The FCA should require payday lenders to use real-time
credit data as an essential part of the affordability checking process. It is pointless to have access to real-time credit data if lenders do not use it.
Even on the FCA’s own analysis, after the cap was introduced the proportion of borrowers who experience financial distress as a direct result of taking out payday loans is expected to remain as high as 40%. We believe—and I think the research bears us out—that the majority of those will arise from people who have taken repeat or concurrent loans. The introduction of a regulatory database would be a powerful new tool to ensure that the FCA’s caps and restrictions are adhered to. In the face of a dynamic, shape-shifting industry, the danger is that the FCA will not have the tools to quickly clamp down on bad practice and will to some extent be playing catch-up with a consumer detriment that has already been done.
Real-time data sharing is a step forward that can help to deliver safer lending practices. However, it will do nothing to compel firms to lend in a responsible way. By contrast, a database backed by statute will exclude the possibility of lending outside certain specific rules from the outset. That is the sine qua non for the regulator to get properly to grips with unacceptable lending behaviour.
Baroness Jolly: My Lords, I am truly grateful to noble Lords for raising the thorny issue of payday lenders and for the informed debate that ensued. I will first discuss the amendments in the names of the noble Lord, Lord Alton, and the right reverend Prelate the Bishop of Truro. I am grateful to the right reverend Prelate the Bishop of Norwich for speaking in his stead.
The Government share the concerns of noble Lords that this market has caused serious problems for consumers, with unscrupulous lenders taking advantage of vulnerable consumers. The Government have acted decisively to fundamentally reform regulation of the payday market. The Financial Conduct Authority’s new, more robust regulatory system is already tackling sources of consumer detriment in this market. The Government have legislated to require the FCA to introduce a cap on the cost of payday loans to protect consumers from unfair costs, which will be in place by 2 January.
We are committed to tackling abuse in the payday market wherever it occurs, including in the marketing of these loans. The Government strongly agree with noble Lords that it is unacceptable for payday lenders deliberately to target vulnerable consumers with their advertising material. However, it is clear that a robust set of measures are now in place to protect the vulnerable from such practices. Payday loan adverts are subject to the Advertising Standards Authority’s strict content rules. The ASA enforces the rules set out by the UK Code of Broadcast Advertising, or the BCAP Code. The BCAP Code requires that all adverts are socially responsible and that young people are protected from harm.
These rules specifically prohibit payday loan adverts from encouraging under-18s either to take out a loan or pester others to do so for them, and the social responsibility requirement of the rules prohibits lenders
from deliberately targeting vulnerable people such as problem gamblers. The ASA has powers to ban adverts which do not meet its rules and has a strong track record of doing so: since May of this year the ASA has banned 11 payday loan adverts, including action against adverts which the ASA adjudged to trivialise payday loans. In addition to this, the FCA has introduced tough new rules for payday adverts, including the introduction of mandatory risk warnings and a requirement to signpost free debt advice. The FCA also has powers to ban misleading adverts which breach its rules.
It is important to understand the scale of this issue, and that any action is informed by evidence. Ofcom research found that payday adverts comprise a relatively small 0.6% of TV adverts seen by children aged four to 15—around one a week. As the noble Lord, Lord Alton, mentioned, the Broadcast Committee of Advertising Practice is currently reviewing how its advertising rules relating to the protection of children are applied to payday loan advertising on TV. The Government look forward to the findings of the review, which we expect to be published before the end of the year.
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I turn now to the proposal for a levy on payday lenders as set out in Amendment 105P. The Government believe that the key to tackling problem payday lenders is tougher and better regulation. As I explained earlier, the Government have fundamentally reformed regulation of the payday market with the introduction of the FCA’s tough new regime, including a cap on the cost of payday loans. The amendment proposes to impose a levy on lenders to support free debt advice and credit unions. The Government believe in the importance of free debt advice and have put the provision of such advice on a sustainable footing through the Money Advice Service. Free debt advice is funded by a levy on lenders, once they are fully authorised by the FCA. Payday lenders will also contribute to this levy. The noble Lord’s proposal would duplicate the existing funding arrangements for debt advice.
It is also important to note that the FCA is taking steps to ensure that vulnerable consumers are aware of the free debt advice that is available to them, including imposing signposting and risk warning requirements on payday lenders. The Government have provided significant support for credit unions by investing £38 million to support their sustainable growth. We have also raised the interest rate that credit unions are able to charge, and we have undertaken a call for evidence on how best to support the growth of the sector. The findings of this will be published shortly. The Government therefore firmly believe that consumers will be best served by the tough new regulatory regime and the Government’s ongoing support for free debt advice and credit unions.
I turn now to the issue of data sharing in the payday market, which is addressed by Amendment 105Q. The Government share the concerns of noble Lords that credit data-sharing is key to proper affordability assessments and promoting a competitive market. The FCA has put in place binding requirements around
lenders’ affordability assessments. The FCA’s rules are based on the principle that money should be lent to a consumer only if they can afford it. Recent redress schemes highlight that firms will not get away with ignoring the FCA’s requirements.
To support effective affordability assessments, the FCA has made it clear to payday lenders and credit reference agencies that they must identify and remove any data-sharing blockages involving payday lenders as a matter of urgency. In its consultation on the cap on the cost of payday loans, the FCA stated that it expects to see more than 90% of current market participants and more than 90% of loans being reported in real time by November. In order to improve the coverage of real-time databases, firms will also need to share data with more than one credit reference agency. The FCA will set out its assessment of progress in this area alongside the publication of its cap rules later this month.
Perhaps I may now address the comments made by noble Lords during this excellent debate. The noble Lord, Lord Alton, and the right reverend Prelate the Bishop of Norwich raised the issue of financial education for children and pointed out that it is woefully inadequate. The Government have made financial literacy statutory for the first time as part of the citizenship element of the national curriculum for 11 to 16 year-olds. This will involve strengthening the curriculum in mathematics in order to prepare young people to make sound financial decisions. The noble Baroness, Lady Drake, raised the issue of the Government stimulating demand for debt advice. As I have said, the Government have put free debt advice provision on to a sustainable footing through the Money Advice Service. The FCA requires payday lenders to signpost free debt advice, including in all financial promotions and advertisements.
The noble Lord, Lord Harris, talked about tightening up on payday lenders, but that might have the adverse effect of directing more people towards illegal moneylenders. This is an important point. The FCA has designed the cap to meet the needs of UK consumers and it is conscious of the risk presented by illegal money lenders. Illegal lenders are policed by the Illegal Money Lending Team and by the FCA using its new powers. Both the FCA and the IMLT can prosecute illegal lenders.
In other contexts, products unsuitable for children, such as alcohol and those related to gambling, cannot be targeted at children—a point made by the noble Lord, Lord Alton. Payday ads are not generally seen on children’s TV. The main trade body and the largest firm, Wonga, have specific policies not to advertise on children’s TV. Ofcom has also found that over a quarter of the TV watched by four to 15 year-olds is broadcast after 9 pm, so that placing additional scheduling restrictions may not cause children to see fewer adverts. Content rules are key, and these are in place.
The noble Lord, Lord Alton, and the right reverend Prelate the Bishop of Norwich said that 80% of payday loan ads are shown before the watershed, so it is insufficient that adverts are not shown in broadcasting directed at children. First, it is worth noting that Ofcom found that children aged four to 15 see, on average, 1.3 payday ads per week. Children watch TV
after the watershed; Ofcom found that over a quarter of TV was seen by that age group of children. So the risk is less scheduling. ASA rules are strong and effective and specifically ban trivialisation or the targeting of children. It bans ads which break these rules; for example, by making it appear easy or indeed non-risky to get a loan.
Lord Stevenson of Balmacara: My Lords, I hope the noble Baroness is not falling into a mode of argument which suggests that since you cannot stop children watching programmes all the time, it is not worth the candle to try to prevent these things happening.
Baroness Jolly: Nobody wants young children to grow up thinking that payday loans are the right way to go but we believe that currently there is a tough package of measures in place to ensure that vulnerable consumers are protected from inappropriate practices. I hope that the noble Lord will see fit to withdraw the amendment.
Lord Mitchell: I just want to make the point again that there is a difference between advertising that is directed at children and advertising that they just happen to see, but that really they are the same thing none the less. Children see them.
Baroness Jolly: Indeed. However, advertising of payday loans is less targeted towards children currently than it may have been in times past. There is also a larger issue here around parents helping children to understand. These adverts are shown in all houses, whether or not the parents have a problem with payday loans. There is an issue for parents to teach their children that this is not the way to go, even though for the majority of parents, that is not the case. However, the Government believe that regulation rather than statutory legislation is the way to move forward in these particular cases.
Lord Alton of Liverpool: My Lords, I am grateful to the noble Baroness, Lady Jolly, for her response to what has been, as she rightly said, a really excellent debate and one which I think has united opinion on many sides of the Committee. The noble Lord, Lord Harris of Haringey, was right when he said earlier on that if this matter could not be successfully resolved in Committee today, it would undoubtedly be returned to on Report. I get the sense, having just heard the
concluding remarks from the Minister, that we will want to bring these amendments back on Report, because many of us do not think that regulation will be sufficient to deal with something that needs to be put on a firm statutory basis.
The thing that I will take away from the debate this afternoon is that, as the right reverend Prelate the Bishop of Norwich said earlier, four out of five children are not receiving money management education. I was particularly struck by the graphic example that he gave of people taking out a loan in order to pay for a pizza. That underlines where we are and why we have to do something about this situation.
Positive points have come out of the debate as well. The noble Baroness, Lady Jolly, touched on the issue of credit unions. I intended to do precisely that. The noble Lord, Lord Harris, is right to say that once we dispose of the usurious rates of interest that are being charged by payday loan sharks, that will be replaced by the sort of people described by the noble Lord, Lord Mitchell, offering all sorts of forms of violence. Organised crime may well move into this slot if we do not take preventive measures. We need a fundamental decision on how to give additional support to the welcome support given by the noble Baroness to credit unions, as well as dealing with pester power, dancing puppets and the watershed issue—all the sorts of things raised by the noble Baroness, Lady Crawley, my noble friend Lady Howe, and the noble Baroness, Lady Drake, who, rightly with the noble Lord, Lord Stevenson, reminded us of the importance of free debt advice services.
I was also struck by what the noble Baroness, Lady Bakewell, said, about the destruction of the age of innocence, and what was said elsewhere about the importance of updating the language of children’s protection. I made the point in my opening remarks that if we can do these things on a statutory basis for alcohol and gambling, there is no reason why we cannot do it for payday loan advertising targeted at children as well. I hope that in the period now elapsing between Committee and Report the Government will think again about this and perhaps have discussions across the Chamber to see what can be done to reach consensus. I get the sense that we all want to reach the same conclusion. I beg leave to withdraw the amendment.
Committee adjourned at 7.41 pm.