Scott Robert Helping Firms Meet Requirements ASA Requirements
1. Scott Robert:
Helping Firms Meet Requirements ASA Requirements
Wonga, a popular payday lender in the
United Kingdom, had a television
advertisement banned by advertising
watchdog, the Advertising Standards
Authority (ASA).
Scott Robert, a leading compliance
consultant in the country, helps firms
understand the case of Wonga to prevent
them from having the same predicament.
5. Many firms in the payday lending industry believe that APRs are not
relevant to loans, which typically last only one month. Wonga’s case, however,
highlights that the authorities take a different view of the matter. Scott Robert
suggests that firms must be careful in stating the APR on their promotional
material and make sure they do not suggest, in any way, that the level of the APR
is not important. Companies should state the APR whenever the advert contains
any sort of incentive to take out credit.
6. Appreciating the Relevance of APR
Critics of payday lending have pointed out
that loans are frequently extended and that the more
this happens, the more relevant the APR becomes.
The ASA has banned a Wonga advert on
three occasions. In October 2013, the agency
banned Wonga from broadcasting a radio advert,
which included a song. The ASA took issue with the
song’s lyrics, suggesting it was appropriate to use a
payday loan to supplement monthly income. The
agency also felt the advert treated the subject of
borrowing money with too much levity.
7. In July 2012, ASA judged the lender to have omitted the APR from a television
advert when it should have been included.
Charity Citizens Advice (CitA) had referred another Wonga television
advert to the ASA. CitA believes that Wonga should have quoted the APR in the
advert. Furthermore, CitA believes that the advert suggests a payday loan is
suitable for addressing general money problems.
Some commentators have pointed out that the effect of ASA bans on
advertisements is somewhat limited. The watchdog can ban the advert from being
shown again, but often by the time it gets round to passing judgment, the company
has stopped showing the advert anyway.
Payday lenders, however, are now subject to the regulation of the
Financial Conduct Authority, that has their own rules on the content of financial
promotions and can issue fines to firms with promotions that fail to meet
requirements.