After a year-long investigation by the Office of Fair Trading (OFT), it is thought lenders will face advertising curbs and be under closer supervision.
Big deal!
With much lending at the ‘budget’ end of the market depending on the premise that people simply do not understand percentages, much less APR, the emphasis should surely be on helping people fully understand the situation they are entering via a payday loan.
When the key issue is the impact of weekly repayments on a pay-packet, a potential borrower, already panic-stricken because of inability to cover outgoings, ignores interest-rate and duration of the repayment-schedule. For these non-savvy consumers, 4,500% APR is meaningless, however large the typeface, or the frequency of explanation.
Might we suggest that a compulsory headline such as:
“If you borrow £100, you will owe us £4,600 after 12 months!” might have more impact?
The lenders can be expected to soften the impact in the remainder of the advertisement, but at least they will be forced to use reality as a starting point.
No comments:
Post a Comment