Tyne & Wear

Payday lenders face advertising ban in Newcastle

Billboard adverts for so-called payday loan firms could be banned in Newcastle after councillors reported a 400% rise in people seeking help with debts.

Newcastle City Council has already blocked access to the most popular payday websites from computers at its libraries and customer service centres.

More than 22,000 people in the city sought help from debt advice agencies in 2012, according to the authority.

The trade body of short-term lenders said it was "concerned" at the move.

'Real problem'

Last month Plymouth City Council imposed similar restrictions, saying it wanted to protect people from "spiralling debt."

Payday lenders, some of which charge annual interest rates of several thousand per cent, have been accused of a variety of poor practices, including aggressive debt collection and failing to work out whether repayments are affordable.

The leader of Labour-controlled Newcastle City Council, Nick Forbes, said: "We've got a real problem here and the main reason is that we have payday loan companies offering extortionate rates of interest that get people trapped in a cycle of ever-increasing debt.

"We have already banned access to payday loan companies from council computers and refer users to recognised credit unions.

"We also want to limit the availability of billboards and bus shelters for advertising payday loan firms.

'Irresponsible lenders'

"That is a bit more difficult because we don't own the sites. But we are actively talking to the companies that do."

Russell Hamblin-Boone, chief executive of the Consumer Finance Association, the principal trade association of short-term lenders in the UK, said: "Newcastle City Council is clearly entitled to take any action it deems necessary and we would support any initiatives that drive out irresponsible lenders.

"However, we would be concerned that, without evidence of its impact, this action prevented people in Newcastle having access to responsible credit providers.

"Responsible lenders explain the costs up front in pounds in pence, use credit reference agencies to check details and will not lend if they think it will make financial situations worse."

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