Wonga and other payday loan companies have been warned that they must either reform or face a ban on advertising at a summit attended by regulators, government ministers and consumer groups yesterday.
The summit yesterday (1 July) comes just days after the Competition Commission announced it would carry out an investigation into the payday lending market, after the industry failed to change their business practices in the 12 weeks the Office of Fair trading gave them back in March.
The summit considered what measures the Financial Conduct Authority (FCA) could introduce to protect consumers when they become the regulator next April and the discussion focused on advertising, rollovers and affordability checks.
The discussion and the summit also reviewed the effectiveness of industry codes and the customer charter.
Jo Swinson, the consumer minister, who hosted the summit, said: "I have long had specific concerns about the advertising of payday loans and my department has commissioned research to look into the effect of payday lending advertising on consumer behaviour."
The FCA, which is one of the successors of the Financial Services Authority, will oversee the consumer credit market from next year and the summit marks a change in how the whole market, including payday lenders, will be regulated.
Sajid Javid, the economic secretary to the Treasury, said: "The FCA’s role will be to ensure that consumers are fairly treated and are able to reap the benefits of a competitive market."
The summit follows the Government announcing a series of actions to tackle poor compliance in March. The plans saw two payday lenders have their licences suspended, and two payday ads banned by ASA for misleading consumers.
On the panel was: Javid; Lord Freud, the minister for welfare reform; Clive Maxwell the chief executive of the OFT, and Martin Wheatley, the chief executive of the FCA.
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