The Broadcast Committee of Advertising Practice (“BCAP”) Code regulates the content of television advertisements broadcast by channels and stations licensed by Ofcom. Broadcasters must therefore keep in mind the BCAP Code when deciding whether (and how) to include advertisements for payday loans in their programming schedule. The BCAP Code is based on principles of consumer protection and social responsibility. One of the key principals of the BCAP Code is to protect consumers from financial harm.
In 2014 BCAP carried out a Payday Loans Review. The review investigated concerns regarding payday loan advertising and assessed how the advertising rules were being applied to payday loan advertising appearing on television. As a result of the review, the Committee of Advertising Practice (“CAP”) has recently published guidance to help with the interpretation of the rules set out in the CAP and BCAP Codes. The guidance addresses whether advertisements for payday loans are likely to be considered socially irresponsible by trivialising the seriousness of taking out a loan.
The CAP Code rules state that “marketing communications must be prepared with a sense of responsibility to consumers and to society”. Additionally, the BCAP Code rules state that “advertisements must be prepared with a sense of responsibility to the audience and to society”. BCAP consider that it is questionable whether advertisements for payday loans, as currently presented to the public, comply with these requirements.
The CAP guidance clarifies the way in which the CAP and BCAP Code rules should be interpreted. It warns that advertisements risk breaching rules if they:
- suggest loans are a suitable means of addressing ongoing financial concerns;
- condone the use of loans for “non-essential products or frivolous spending”; or
- unacceptably distort the serious nature of payday loan products.
CAP and BCAP see short-term high-cost loans as primarily being of benefit to and designed for those in need of money to cover occasional unexpected shortfalls for short periods of time. Any treatments that suggest use of the loans outside these types of use are likely to be found to be irresponsible. Advertisements should not encourage consumers to make an ill-considered decision about borrowing, particularly without considering the financial implications of doing so.
The guidance suggests that animation, catchy jingles and humorous themes should be used with care. Additionally, the guidance suggests specific wording to help payday loan advertisers communicate reasonable benefits of the product (for example, “it helped out as my boiler was broken and I was two weeks away from pay day” or "they made sure I could afford monthly repayments").
The Advertising Standards Agency is proactive in taking action against payday loan advertisements that breach the BCAP Codes. Whilst currently the focus has been on the advertisers, broadcasters also have responsibilities in relation to these types of advertisements. Broadcasters are required to exercise responsible judgement on the scheduling of advertisements and to avoid unsuitable juxtapositions between advertising material and programmes, including children's programmes. It will be important therefore for broadcasters to be aware of the timing and frequency of advertisements for payday loans.
BCAP is proposing to launch a consultation on scheduling television advertisements for payday loans by the end of July 2015.