All the announcements in the world form the likes of the Office of Fair Trading and the Archbishop of Canterbury seem to have made very little difference to the big players of the payday loans world. Figures have revealed that they are ploughing even more money into advertising than before.
So why is this so concerning?
The figures came from Nielsen, and were put together for the Mail on Sunday. They found that in the past 12 months, the amount that the biggest five payday lenders were spending on advertising had risen 26% - to an incredible £36.3 million. There are a number of reasons why this should raise concerns.
FirepowerFirst, it shows just what firepower the industry has. Anyone who held out some hope after the Archbishop of Canterbury announced plans to use the weight of the church to boost credit unions so that they provided a real alternative, will see that the church is up against a considerable commercial opponent (and one it invests in to boot).
Likewise the fact that the OFT investigation prompted a huge exodus from the market: 20 of the top 50 lenders left the market rather than face investigation, may have led some to hope that the sector was declining. These figures reveal just what a false hope this was: the remaining players have significant fire power.
MainstreamSecond, the more advertising is thrown behind payday loans, the more people will see it as the mainstream solution, and will not look to other more cost-effective ways to borrow or make ends meet.
Gillian Guy, Chief Executive of Citizens Advice, said:"Consumers need more options, not more adverts from payday lenders. As the squeeze on living standards continues, payday lenders know they have a captive audience of people who need extra cash to tide them over, but aren't catered for by mainstream lenders."
"The news that advertising spending has been increased even while the Office of Fair Trading and Competition Commission investigate the industry is a slap in the face for consumers who rely on lenders to treat them responsibly."
TargetsThird, advertising is often focused on people who have significant financial problems. The enormous number of daytime adverts predominantly reach the old, the young and the unemployed.
The government is rightly concerned about this advertising. Back in July the head of the Financial Conduct Authority Martin Wheatey said: "I think there are lots of problems with advertising – the targeting of young people, children, students and so on." He said that a ban on advertising would be an extreme measure, but he wasn't ruling it out.
The government is examining the effect of payday loan advertising on consumer behaviour, which is due to report back this autumn.
FrustratingFinally, it demonstrates perfectly how frustrating the spend of regulation is. The government has promised action, run a summit, investigated the effects of advertising, and started a year-long study into the market. The Financial Conduct authority is formulating a strategy which it will announce in the autumn.
Meanwhile, the industry throws tens of millions of pounds at advertising to tempt more people to take these loans out, more than 8 million loans are taken out each year, averaging £370 each.
More than 20,000 people are calling debt charities in a panic about these loans, more than 7,000 of them have more than five payday loans on the go at any one time, and 50% of revenue from the loan providers comes from people forced to roll the loans over because they cannot afford to repay them.
Guy adds: "We have serious concerns about the way that payday lenders treat their customers - evidence from our clients shows that lenders routinely break the promises they made to treat customers fairly. The payday loan industry must focus on cleaning up its act and treating customers fairly, not increasing business regardless of the cost to customers."