A Wonga advert has been banned for implying that the representative APR of 5853% was "irrelevant".
The television ad for the payday loans company featured a conversation between two puppets, who said: "Right, we're going to explain the costs of a Wonga short-term loan.
"Some people think they will pay thousands of per cent of interest. They won't of course - that's just the way annual rates are calculated. Say you borrowed £150 for 18 days, it would cost you £33.49."
The Advertising Standards Authority (ASA) received 31 complaints that the ad confused viewers about the interest rate applied to a Wonga loan, implied that the representative APR was irrelevant to a short-term loan and was irresponsible because it encouraged consumers to disregard the representative APR and thereby trivialised the decision to take out a short-term loan.
Wonga said its objective had been to transparently explain the total "true" cost of a short-term Wonga loan.
The company noted that it was required to include both the annual interest rate and the representative APR in the ad and said it "regretted that this may have confused or misled some viewers".
Upholding the complaints, the ASA said it understood that the ad had been intended to clarify the costs of a Wonga loan.
It said: "Whilst we acknowledged that viewers taking out and repaying the loan within the stated time period would not repay 5853% of the loan, we were nevertheless concerned that viewers would be left without a clear understanding of how the information in the on-screen text could be applied to a Wonga loan, given the ad's assertion that the representative APR was not indicative of the cost of the loan."
"We considered that, though it attempted to clarify the costs associated with a Wonga loan, the ad created confusion as to the rates that would apply. On that basis, we concluded that the ad was misleading."
The ASA also found that the representative example, including the representative APR, was not sufficiently prominent in the ad and that the ad irresponsibly encouraged viewers to disregard the representative APR.
It ruled that the ad must not appear again in its current form.