Wonga advert banned for failing to accurately show interest rate on payday loans

Yet another Wonga advert has been banned from British screens for failing to show the true cost of borrowing.

 

After a week in which the controversial payday lender reported a 51pc drop in net profit and decided to to write off the debts of 330,000 customers, the Advertising Standards Authority (ASA) has hit Wonga with another blow.

 

The Financial Times reports that the ASA has banned the ad as it fails to show the representative annual interest rate on Wonga loans.

 

The banned advert implies that customers could “save money” by taking out a loan at Wonga, but neglected to mention any interest rate that comes with it.

 

Wonga has reportedly been told the advert must not appear again in its current form.

 

Advertising from the payday loan sector has come under heavy scrutiny this year, with four other companies also having TV ads prohibited.

 

However, the government has rejected calls to ban outright the payday lenders from advertising on children’s TV.

 

The Financial Conduct Authority (FCA), who are responsible for regulation of the industry, has recommended payday loans adverts carry a “health warning”. As an example, it suggested: "Warning: Late repayment can cause you serious money problems. For help, go to www.moneyadviceservice.org.uk".

 

Earlier this year a different Wonga advert was banned for “misleading” viewers about the lenders’ interest rates.

 

The ad featured two puppets talking about how to secure a loan from Wonga, with one of them describing interest rates over 5,000pc as being “irrelevant”. The clip formed part of a series of ads featuring puppets called Betty, Earl and Joyce.

 

In a bid to clean up the brands’ public image, the puppet ads were swiftly dropped by Wonga chairman Andy Haste when he came into the role in July. He said his intention was to shed any advertising which “could attract children”.

 

Wonga has endured a rough patch recently – a fall in profits has prompted the company to reconsider its sponsorship of Newcastle United.

 

The company also decided to write off the debt of 330,00 customers as it attempts to "improve standards in consumer credit".