Advertising Association criticises local councils' payday ad bans

The Advertising Association has criticised local authorities for making moves to ban payday loan companies such as Wonga from advertising on billboards, after it emerged two more councils are considering doing so.

Payday loans: Advertising Association cricises councils' ad bans
Payday loans: Advertising Association cricises councils' ad bans

Several councils, including Cheshire East and Medway, are contemplating a ban on short-term loan ads, but the Advertising Association has warned that the interference could be "detrimental".

Tim Lefroy, the chief executive of the Advertising Association, said "two highly competent, well-respected national regulators" cover payday loan advertising.

He said: "The Advertising Standards Authority and Office of Fair Trading are best placed to determine whether further attention is required."

Already the Government has said it will work to bring new advertising restrictions for payday loan companies in conjunction with the OFT, the ASA and the industry.

The Competition Commission is also looking into payday loans and issued a statement on 14 August. It said the Department for Business, Innovation and Skills had appointed Ipsos Mori to look into the impact of short-term lending advertising on consumer behaviour.

A Medway Council spokesman said the council was taking legal advice on whether to ban the ads and said: "No decision of any kind has been taken at this stage."

He added: "We always welcome further scrutiny of the payday loan market. High-cost payday loans can lead people into a dangerous spiral of debt which they can often find extremely difficult to get out of."

However, Lefroy warned the moves by councils could set a "dangerous precedent".

He said: "Outdoor advertising contracts represent millions of pounds invested in councils – keeping local taxes down, bus services cheap and street furniture in good condition.

"Limiting the potential return on that investment because a sector has become politically unpopular would undermine those arrangements, to the detriment of local communities."

Plymouth was the first council to ban payday loan firms from advertising on billboards and bus stops in its city centre earlier this month.

A spokeswoman from Cheshire East Council has been contacted by Campaign, but had not responded by the time of publication.

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