Google’s decision to update their advertising policy in regards to high-cost short-term loans including payday loan products is an interesting one. The change came into force in May and means that advertisers in the UK market cannot advertise HCST loan products with terms under 60 days in AdWords.
The stated motivation for the policy change is to ‘protect our users from deceptive or harmful financial products’* but it can be argued that there is a genuine need for payday loan products, which are often cheaper than an unarranged overdraft.
HCST products are arguably now the most highly regulated consumer finance product in the UK market. The FCA in the UK does an excellent job of regulating the industry and has worked swiftly to eliminate poor conduct such as hidden fee charging, continuous payment authorities and rolling over debt indefinitely.
The main impact of the change on the UK market appears to be that lenders and brokers are advertising loan terms of three months plus, at the same Representative APR as before the changes came into play to get around the changes. This could mean that a consumer will end up paying more in interest on the loan than they would have done had the loan been repaid over a shorter term. A customer taking a typical short term loan over 30 days and repaying on time will not pay more than £24 per £100 borrowed under FCA rules. **
There is a large segment of the UK population who are currently underserved by traditional lenders – we work with many lenders who responsibly meet these customers need for short-term finance.
Stop Go Networks are fully authorised and regulated by the FCA and treating customers fairly is at the heart of everything we do, generating 000’s of high-quality applications a month for the lenders we work with. If you are missing out on applications as a result of the changes to Google AdWords policy or are stretching your credit policy and profitability by only underwriting loans on 3 month + terms get in touch – we can help.