Why on earth did the Katona pay-day loan ad get banned?

"Fast cash for fast lives" comes under ASA's watchful gaze.

Ex Atomic Kitten star Kerry Katona recently made headlines once again for being a minor celebrity without much cash. This time, the Advertising Standards Agency (ASA) has banned payday loan company Cash Lady’s advert starring Katona, as it could be seen as "irresponsible".

Payday loan companies, such as Cash Lady or Wonga, offer high interest loans intended to be paid back on the day of your next pay check. Cash Lady offers loans of up to £300 a month with an annual percentage rate of 2,760. For example, if you borrow £200 from Cash Lady for 28 days you will pay back £258 on payday.

It’s no secret that payday loans are often seen as a slippery slope; borrowing £200 and paying back over 125 per cent of that can’t exactly be seen as responsible money management. However, it is also true that sometimes payday loans may be, to those who use them, the only way out of a sticky situation.

Why did the ASA ban the advert, I hear you cry. Everyone knows the sky high nature of payday loan interest rates and that Kerry Katona has herself had money problems (she was declared bankrupt in 2008 for failing to pay her tax bill). Cash Lady claimed they chose Katona because the public could relate to her, making her a face a beacon of hope.

However, the problem the ASA had with the advertisement featuring Katona wasn’t so much a problem with the “star” but with the branding of Cash Lady. The advert stated that the payday loan company provides "fast cash for fast lives", which may purport to the public that the payday loan option isn’t only for emergencies but also can be used to fund a "fast life," like that of Katona’s.

Advertising is often sexy, it’s often weird and quirky, and it needs to be eye catching but most of all it needs to appeal to the audience. "Fast cash for fast lives" certainly appeals to those who need money to quickly sort out their problems – however, with the face of a celebrity one can see how the ASA could see it as problematic to allow an advert that showed a short term solution to what is sometimes a more long term problem with celebrity endorsement.

I doubt it will be long until payday loan companies are asked to attach a warning to their adverts akin to those on alcohol adverts. After all, payday loans can become an addiction. 

Kerry Katona. Photograph: Getty Images

Katy Maydon is a journalist for Retail Banker International

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.