Ofcom reveals 397,000 payday lending adverts, such as those from Wonga, were shown in 2012 (Photo: Reuters)
Payday lending commercials have rocketed by 64% from 2011 to 2012 after companies, such as Wonga, peddled out 397,000 adverts last year.
According to the latest data by Ofcom, which is based on analysis of Barb viewing data over five years from 2008 to 2012, payday loan adverts have risen from 17,000 in 2009 to almost 400,000 over the last three years.
The data shows that the 2012 adverts were seen by adult viewers a total of 7.5 billion times compared to 12 million times in 2008. This equates to every UK adult seeing a payday loan advert on average 152 times last year.
Ofcom revealed that the target audience were likely to be the unemployed as last year, more than half (55%) of all payday loans adverts on TV were broadcast in the daytime schedule between 9:30am and 4:59pm.
Cracking Down on Payday Lending
At the end of November, UK Chancellor George Osborne revealed that capping payday loan costs is "the logical step" and that the level of the cap will be decided by the Financial Conduct Authority (FCA).
"We've taken steps to control things like the roll over of those loans and I think the next logical step is to cap the overall cost of credit," added Osborne.
"It's working in other countries, it helps hard-working people, and in fixing the banks we need to make sure we fix all parts of the banking and financial system and payday lending is part of it."
The FCA's final determination will be included in the Banking Reform Bill.
The FCA has already said it plans to possibly ban advertising and how quickly loans can be made by payday lenders, as part of its crackdown on the industry, which lawmakers have described as 'preying on the vulnerable'.
The UK payday lending sector is worth £2bn ($3bn, €2.3bn) in the UK. Its value has doubled since 2008/2009.
Current figures show that this corresponds to between 7.4 and 8.2 million new loans.
Despite these loans being described as one-off short term loans, costing an average £25 per £100 for 30 days, up to half of payday lenders' revenue comes from loans that are rolled over or refinanced.
Interest rates on the short term loans can reach highly inflated levels.
One of the UK's largest payday loan companies, Wonga, has recently bumped up its representative APR of 5,853% on its website.
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