Ad description
A TV ad for Oakam Ltd, a short-term loan provider, seen on 15 February 2017. The ad featured an actor who said, “I’m a single mum on benefits, I needed some money to tide me over. I didn’t think a loan company would accept me even though I have an income of over £500 a month.” On-screen text stated “1421% APR representative (variable). Minimum monthly income of £400 from salary or benefits … Subject to status. Ts&Cs apply”. A voice-over then said, “Ask Oakam about borrowing up to £1750, 1421% APR variable.” On-screen text stated “Warning: Late repayment can cause you serious money problems”. The voice-over then said, “People not machines make our loan decisions, that’s why we talk to you and get to know your circumstances.” The ad then showed the actor in a scenario with what appeared to be an Oakam advisor. The actor then smiled and said, “I asked Oakam and they said yes.” The voice-over then said, “Ask at oakam.com, phone or pop into one of our stores. Ask Oakham, we love to say yes.”
Issue
Two complainants challenged whether the ad was socially irresponsible, because it targeted people on benefits to take out a payday loan.
Response
Oakam Ltd said that they did not offer payday loans, that is, lending that required repayment typically within one month of both the principle money (the amount loaned) and associated charges. Instead, they offered small structured loans with terms typically between three to six months in which customers repaid the money by concurrently reducing the principle money and the interest. Oakam said that their APR tended to be significantly lower than payday loans.
Oakam said that currently 46% of their customers were either in receipt of a form of benefit or that benefits were their sole income. They said consumers who received benefits should not be excluded from accessing credit. They had designed comprehensive affordability checks and in the majority of cases face-to-face interviews were also included, which determined whether offering a loan was within an applicant’s ability to repay without them suffering financial hardship or distress. Oakam also said that they ensured repayments were sustainable for the applicant over the period of the loan. They said that more thorough underwriting was carried out by them than would be the case for customers not in receipt of benefits before a loan was made available.
Clearcast said that many consumers in a range of circumstances would at some point require financial assistance and that would include viewers whose income was wholly or partly through state benefits. They said that companies such as Oakam provided a service to consumers who may not otherwise be eligible for a loan from a traditional bank, either because their credit record was poor or they had a low income, or because they were in receipt of benefits.
Clearcast also said that they understood that Oakam had a thorough underwriting protocol in place that ensured customers could afford repayments. Furthermore, consumers would be made aware of their obligation to repay the loan because of the on-screen text “Late repayment can cause you serious money problems”.
Assessment
Not upheld
The ASA acknowledged Oakam’s service differed from payday lenders where loans were taken over a short time period, typically until a customer’s next wage packet. However, we understood that Oakam offered structured loans where customers paid back the money which reduced the principle amount and interest over three to six months. The ad featured an actor who stated, “I’m a single mum on benefits, I needed some money to tide me over. I didn’t think a loan company would accept me even though I have an income of over £500 a month”. We noted that the ad included only factual statements about the minimum income necessary for the potential loan and also referenced the loan RAPR, including the clear statement “Warning: Late repayment can cause you serious money problems”. We noted that this information was displayed clearly in the on-screen text for around half of the ad. Consumers would, therefore, be aware of the RAPR and the clear warning provided would have alerted them to the penalties associated with late repayment.
We also noted that during the ad the voice-over stated, “People not machines make our loan decisions, that’s why we talk to you and get to know your circumstances” and included a scene with the actor and an Oakam representative. We considered that those factors conveyed to consumers that Oakham took a prudent approach, using appropriate checks to ensure those applying for credit could afford the repayments whatever their source of income.
The ad presented information about Oakam’s service, including key eligibility requirements such as minimum income requirements and information about the approval process, alongside a clear warning regarding late repayments. In that context we concluded the ad was not socially irresponsible.
We investigated the ad under BCAP Code rule 1.2 1.2 Advertisements must be prepared with a sense of responsibility to the audience and to society. (Responsible advertising) but did not find it in breach.
Action
No further action necessary.
