Google are to ban adverts for short term loans and lending on their search engine.
The announcement was made on their blog and is due to take effect from July 2016.
“This change is designed to protect our users from deceptive or harmful financial products and will not affect companies offering loans such as Mortgages, Car Loans, Student Loans, Commercial loans, Revolving Lines of Credit (e.g. Credit Cards).”
David Graff, Director, Google Global Product Policy
It’s unclear if other search engines, such as Bing, will follow in Google’s footsteps. The move comes two years after the FCA started to regulate the sector and made other recommendations on lending criteria, standards and operating procedures.
Graff also went on to explain that:
“Ads for financial services are a particular area of vigilance given how core they are to people’s livelihood and well being.”
Loan adverts that advertise an APR of 36% or more will also be banned from July in the US. This is then expected be rolled out in other regions as mentioned by Graff.
“In the U.S., we are also banning ads for loans with an APR of 36% or higher. When reviewing our policies, research has shown that these loans can result in unaffordable payment and high default rates for users so we will be updating our policies globally to reflect that.”
While there hasn’t been any official response, from any of the major lenders, firms such as Wonga, Amigo Loans and Sunny could also increase advertising on other online mediums such as facebook and twitter.
“While Google may be closed to payday lenders these firms will probably look at advertising on alternative channels together with increased spending in other areas such as TV or radio. As these firms have already built up a brand, using TV and ironically online advertising, customers looking for payday loans will still know where to go.”
Matt Cheetham, CEO, One Advice Group