PAYDAY lenders are "grooming" the next generation of borrowers and should be banned from advertising on children's television channels, a consumer finance expert has told MPs.
Martin Lewis, founder of MoneySavingExpert.com, said one in three people with youngsters under the age of 10 reported that their children could repeat slogans from payday loan adverts.
Mr Lewis told the Commons Business, Innovation and Skills Select Committee: "I think we are in danger of grooming a new generation towards this type of borrowing. If you think we've got problems now, wait until 10 years' time.
"Grooming is the right term. We're talking about a market that didn't exist five years ago, and you've had people in arguing that this is how people like to use it. They've created the demand, they've created the operational structure, and now they're saying it's what people want. It's deliberately contrived and controlled."
He said data from MoneySavingExpert.com said 14% of those surveyed reported being nagged by their under-10-year-olds to get a payday loan to purchase something they had refused to buy.
He told MPs: "We have normalised this. This niche lending of the last resort has been normalised to a mainstream form of credit by the use of advertising."
Mr Lewis later added: "The payday loan industry insists it is not targeting children, but our research shows kids are being dazzled by catchy tunes and cute puppets. That's why I'm calling on the Government and the Financial Conduct Authority to intervene to restrict the nature of the ads and impose an outright ban from them appearing on kids' TV."
Citizens Advice chief executive Gillian Guy compared payday lenders' adverts to the "old days of cigarette advertising where … we didn't worry about health warnings".
Their comments came after MPs grilled representatives from Wonga, QuickQuid and Mr Lender as well as trade bodies about their business practices. The industry faces a clampdown after charities criticised lenders' behaviour.
A recent inquiry by the Office of Fair Trading found some firms' business models appeared to be based on people being unable to repay their loans on time, causing the loan to roll over and the costs to soar.
Payday lenders insisted their affordability checks are similar to those used by credit card firms.
Henry Raine of Wonga said his company did "everything we can to lessen the effect of bad debt". He added: "The product is actually used moderately by most people."
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