Boris Johnson challenged to act on London Transport high-cost credit adverts

This press release was issued by Ken Livingstone's office this weekend: Walthamstow MP Stella Creasy and Ken Livingstone have called on Boris Johnson to give a cast-iron commitment that high-cost credit companies will not be allowed to sponsor free New Year travel this year, and to reverse his ‘hands off' policy towards payday lenders and other high-interest credit companies.

            Last year Boris Johnson controversially chose the online payday lender Wonga to sponsor travel on New Year’s Eve and allowed the company to place highly prominent advertising across the London transport network. In addition these ads failed to show the typical APR of a Wonga loan, which stands at an astonishing 4,214%.

Stella Creasy MP said: “London suffers from higher debt levels than the rest of the country and we need the Mayor to act to promote responsible lending. The proliferation of payday lenders and home credit providers on our high streets and online is leading to thousands of Londoners getting into severe debt problems. Today Ken and I have set out clear proposals the Mayor could adopt which would help tackle this growing problem. It’s time for Boris Johnson to show some leadership on this issue, starting with a commitment not to give any high-cost lender a massive primetime advertising opportunity through sponsorship over Christmas and New Year on London transport. . . Rather than shrugging his shoulders, the Mayor should be leading the charge to regulate the high-cost credit industry and in doing so providing much-needed support for financially vulnerable Londoners.”

Ken Livingstone said: “The Mayor should use the influence and resources of City Hall to promote responsible lending and alternatives to high-cost loans such as credit unions.” Currently, high-cost lenders are allowed to charge whatever they like for credit. Stella and Ken are calling on Boris Johnson to recognise the damage that high-cost credit can cause by:

1.        Giving a cast-iron commitment that no high-cost credit company will be allowed primetime advertising space on public transport this Christmas and New Year.

2.        Banning all high-cost loan ads on the London transport network until there are caps on the cost of credit. Consumers urgently need these caps to be introduced, but until that happens the Mayor should seek to protect consumers from the marketing strategies of high-cost credit companies.

3.        Ending sponsorship of GLA group events by high-cost credit companies until caps on the cost of credit are introduced. The Mayor should bring in new rules within the GLA group (TFL, MPA, LDA and LFEPA) to stop sponsorship by payday lenders (like Wonga), home credit providers (like Provident Financial) and hire purchase agreement providers (like BrightHouse).

4.        Changing GLA group advertising rules to stipulate that all adverts for financial products must include clear and prominent information about APR rates.

5.        Reversing City Hall’s ‘hands off approach’ to rising levels of debt. It’s time for the Mayor to actively encourage alternatives to high-cost lenders and provide greater support for organisations committed to a fair credit deal such as credit unions and debt advice charities.

            The latest figures show Londoners suffer from higher than average personal debt levels and are much more likely to have taken out high-interest loans:
· 13% of Londoners are in debt arrears compared to the national average of 10%.
· There has been a 75% increase in average debt levels amongst 17-24 year olds in London since 2008 from £3,500 to over £5,500. (Capitalise, 2010)
· Paydaybank.co.uk say over a third of all their loans are made to London residents