Plymouth calls it a day for payday loan advertising

By Phoebe Cooke

Payday loans advertising has been banned from Labour-led Plymouth city council's bus shelters and billboards.

The local authority's move is thought to be the first of its kind as politicians turn against the traditionally controversial payday loans model.

Despite appearing to offer a quick-fix solution to financial problems, payday loans often cause spiralling debt because of very high interest rates.

Chris Penberthy, the cabinet member for co-operatives and community development, said controversial advertising was having a negative impact on the local population and that alternative loan options were required in their place.

"Plymouth's advice agencies are taking calls daily from people who are running up huge debts that are causing stress and hardship to them and their families," he said.

"We need to protect people and make it difficult for payday loan companies to operate in our city but we do recognise times are hard.

"We are working with our partners to make credit union services more easily available in the city centre. This is an affordable lending option for people that won’t trap them with massive interest rates."

The 50 most popular payday loan websites are also going to be blocked across Plymouth council's entire network, which includes libraries and community centres.

The news of the ban comes as the Financial Conduct Authority (FCA) considers a blanket ban on advertising by lenders when it adopts regulation of the industry next year.

The Commons' public accounts committee estimates two million people nationally have payday loans – of which around 5,000 live in Plymouth.

According to a press release issued by Plymouth city council, some companies charge around 5,000% APR, with debt spiralling out of control unless paid straight away.

Not all were thrilled by the news of the recent ban. Payday loan companies accused the council of restricting the choice of the consumer.

"The council is effectively denying choice to local residents without fully understanding either the short-term lending industry or the way people are managing their finances in 2013," Russell Hamblin-Boone, chief executive of the Consumer Finance Association, said.

"Research shows that 85% of payday customers have no trouble paying back their loans, so the council's belief that the loans are detrimental to those that take them is misplaced and not based on evidence."