My Lords, in moving Amendment 102 I am returning to an issue which I raised at Second Reading. I tabled this amendment just before the Summer Recess, which seems a long time ago, but it has lost none of its topicality or, I would argue, its importance.
Amendment 102 is designed to address promotional activities by sellers in the high cost consumer credit market, an issue that I know is of widespread concern in your Lordships’ House and outside it. My amendment complements those which follow in this group and which I also support. It requires anyone selling their
services in the high cost consumer credit market to behave in a specific way: that is, they must ensure that if their service is only purchasable by a consumer aged 18 years or over, it must be communicated in a responsible way such that any promotional material or activity is not targeted at people below the age of 18. In simple terms, the aim of my amendment is to ensure that children are protected from advertising for high cost loans which is both ill suited for children and corrosive in the impact it has upon parents and families as a whole.
This amendment should be seen as part of a suite of measures, alongside Amendments 105B and 105C, to protect vulnerable consumers, although I find the term “consumer” sometimes makes it easier for us to forget that these consumers are families, many of whom are struggling already without the added pressure of intrusive and inappropriate advertising. Debt is an awful blight on families and communities that often are struggling to survive. Certainly in neighbourhoods in the city I once had the privilege to represent in another place—the City of Liverpool—I encountered this frequently over the years. Debt destroys relationships and it can trap large numbers of people.
Sad to say, we are not doing enough, or anything like enough, to educate the generations who will follow us about the management of money. When payday loans are increasingly seen as a normal means of money management then we have a serious problem. This is not scaremongering. In September, the Children’s Society published a report entitled Playday not Payday, which I commend to all noble Lords. Among the headline findings from the report, which I am sure many other noble Lords will refer to in supporting amendments, it states that 61% of parents surveyed believe that seeing payday loan advertisements makes children assume that these are a normal way to manage money. In addition, 72% of children aged 13 to 17 said that they had seen at least one payday loan advertisement in the preceding week; more than two-thirds—68%—said that they had seen at least one on television.
The Children’s Society and the StepChange Debt Charity have provided some very useful information for today’s debate. For instance, in a note circulated to noble Lords, they make the point that 80% of payday loan ads are shown before the watershed. Their research found that more than half of children said that they had seen payday loan ads often or all the time, with 21% saying their school taught them about debt and money management—but therefore that four out of five do not. Playday not Payday discovered that more than half of children aged 13 to 17 recognised at least three payday loan companies, with 93% recognising at least one such company. Some 74% of parents thought that payday loan ads should be banned from television and radio before the watershed, and one-third of children aged 13 to 17 described payday loan ads as fun, tempting or exciting; those children were considerably more likely to say that they would use a payday loan. The Children’s Society says:
“Far from being an inevitable knock-on effect of successful marketing to adults, there is evidence to suggest that children exposed to particularly suggestive loan adverts are then asking and pressuring their parents to take out a loan to pay for things which they have not been allowed”.
Its polling found that parents who had used a payday loan in the past were significantly more likely to say that their children had suggested that they take out a payday loan.
Another organisation, Christians Against Poverty—CAP—a national charity seeking to lift people out of debt and poverty by providing debt help and money management courses, found in a 2013 survey that 20% of its clients had taken out payday loans. When taking out the loan, 61% were asked nothing about their income, 85% nothing about expenditure and 63% nothing about their work status; 77% used their payday loan to buy food.
At Second Reading I referred to The Debt Trap: Exposing the Impact of Problem Debt on Children, another Children’s Society report, published in May this year. I want to remind noble Lords of some of the report’s findings. Families trapped in problem debt are more than twice as likely to argue about money problems, leading to stress on family relationships and causing emotional distress for children. Evidence suggests that problem debt can lead to children facing difficulty in school. Problem debt can also have a profound impact on children’s ability to engage in social activities.
I am not trying to browbeat the Committee but to drive home how important it is that we do something about the current situation. Children—who certainly consume what they see even if they are not able to purchase the service—are not an acceptable market for payday loan advertising. Additionally, these children will one day be consumers in the sense that they will be able to purchase the services they have been exposed to, once they reach the age of 18. The recent Children’s Society report to which I referred earlier would seem to indicate that the normalisation of payday loans as a means of borrowing is already beginning to happen, with 30% of parents aged 18 to 24 describing them as an acceptable means of managing day-to-day expenses—significantly more than older parents.
Developing responsible attitudes towards money must begin at an early age but this becomes much more difficult when a rising generation of younger parents are already influenced by the lure of high-cost credit. My amendment aims to begin the process of nullifying that problem by requiring a greater degree of responsibility from high-cost credit lenders to advertise conscientiously, ensuring that their service is not targeted at those aged 18 or under.
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In other contexts, there are strict rules on how goods and services are marketed to children and young people so that they are protected from unfair pressure to buy products and are not encouraged to engage in dangerous behaviour. Alcohol advertising, for example, cannot be shown around children’s programmes—rightly—or on channels likely to have a particular appeal to children; nor are gambling advertisements that are seen to appeal to young people permitted. I put it to the Minister that this is a logical inconsistency in the current approach. The desire to avoid the normalisation of potentially harmful behaviours is
evident in the way in which alcohol is advertised, yet a similar, measured approach is not being taken with regard to payday loans. I think it should be.
I understand that the Broadcast Committee of Advertising Practice is currently conducting a review into the compliance of adverts for short-term loans and is due to report its findings this month. While I welcome this, and while the Government have pointed to the Advertising Standards Authority and Financial Conduct Authority as sufficiently robust arbiters which may ban irresponsible rule-breaking advertising, there is a broader point here. Ad hoc regulation or advert-specific banning simply does not send a strong enough message. My amendment meets this challenge by placing in statute a responsibility on high-cost credit lenders to target their advertising appropriately.
As recently as last week, the Work and Pensions Secretary expressed concern that:
“Too many children suffer poor outcomes due to the instability of their families”.
I am quite sure that the Minister and the Government are serious and concerned about the well-being of children, parents and families. My amendment provides an opportunity today for us to get our house in order in relation to payday loan advertising. I look forward to the debate that will follow and hope that the Minister will be in a position to accept my amendment, or at least the principle that underlies it, and say how the Government see this problem and how they will address the concerns that I have raised in my remarks. I beg to move.