Children under 10 exposed to payday loans
More than one in three people with children under 10 claim their children have been exposed to payday loan advertising to the extent they have repeated advertisement slogans.
The research, conducted by MoneySavingExpert.com, reveals that 14% of parents have had children under 10 nagging them to use a payday loan after being refused something.
At present there are no rules preventing payday loans firms from advertising during television programmes aimed at children, something MoneySavingExpert's Martin Lewis believes could be damaging.
The website polled almost 3,000 people and found that almost 70% of children under the age of 16 have seen payday loan ads. Almost one in three of the parents surveyed said their kids see payday loan ads as "fun".
Payday lenders offer short-term, high-interest loans, usually on the understanding that the customer will repay the loan when they receive their next pay cheque. Some lenders have been criticised for charging excessive late payment fees and sky-high interest rates of 4,000% or more, leading to an investigation by the Office of Fair Trading.
Lewis says the lax rules on payday loan advertising risks inuring a new generation to the dangers of these loans of last resort, and wants the government to ban payday loan advertising from children's television channels and programmes as well as prevent them from making payday loans look like "a fun little transaction rather than a hardcore form of debt."
The Financial Conduct Authority (FCA) has proposed new rules that will force lenders to put "risk warnings" on their ads, but Lewis argues this "won't stop kids from picking up debt-bingeing habits".
He explains: "Payday loans are part of the costliest kind of instant gratification culture. 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. This vicious circle means we now see these loans normalised. That's why we need legislation or regulation to disrupt this market.
"The payday loan industry insists it is not targeting children, but our research shows that kids are being dazzled by catchy tunes and cute puppets. That's why I'm calling on the government and FCA to intervene to restrict the nature of the ads and impose an outright ban from them appearing on kids' TV."
Short-term cash loans designed to be borrowed mid-way through the month to tide the borrower over until they next get paid, whereupon the loan is settled. Generally used by people with bad credit ratings and/or no access to short-term credit such as an overdraft or credit card. Like logbook loans, this type of borrowing is hugely expensive: the average APR on payday loans is well over 1,000% and in some instances can be considerably more.