Ucas, the university admissions service, has agreed to stop advertising private loans to students following pressure from the consumer finance expert Martin Lewis and a rebuke from the Charity Commission.

Lewis and his organisation Money Saving Expert criticised Ucas last year as “tainted” for marketing commercial loans to students as young as 18 through its mailing lists, after it carried advertising for a private provider that offered loans of up to £40,000.

Ucas, a charity that processes admissions on behalf of British universities and colleges, announced that its media subsidiary would temporarily stop working with private loan companies while it established a new advisory board to vet its policies.

“It is clear funding options are continuing to evolve and the cost of living while at university is a key consideration for students. It is our responsibility to help students understand and navigate all their choices,” Ucas said.

“As this is a developing market, we listen to feedback from students and valued colleagues across the education and financial sectors, including Money Saving Expert, to ensure we provide students with appropriate choices, including those that are commercially available. Based on that feedback, we decided to pause our activity with private loans companies, and no further activity is currently planned.

“With our new Ucas media advisory group, which we are currently recruiting to, we will continue to review this maturing market and further develop a set of principles to incorporate into our advertising framework.”

Lewis praised the decision, saying: “When the Ucas chief executive agreed to meet me on this, we had a robust meeting, where I let them know in no uncertain terms what I thought about a charity – with a near-monopoly communication position with young students - promoting expensive high-cost debt to students.

“The fact it has agreed to pause the adverts is a great start – and we are thankful Ucas’s senior team are willing to listen.”

Ucas said half its income was generated by its commercial media subsidiary, which it uses to keep down application fees. Ucas charges students £25 for applying to two or more universities or colleges.

It was warned by the Charity Commission over maintaining independence from its non-charitable subsidiary. “Charities hold important positions of trust in society, so it is vital that any relationships with non-charitable organisations are clear to those the charity is set up to help,” the commission said.

In 2018 Ucas received £27m in fees, including nearly £14m from applicants. Its commercial subsidiary, Ucas Media, reported income of £19m, with profits of £4.3m paid to Ucas through gift aid.

The company spent £4.7m on administration costs and more than £6m on distribution. Ucas Media also spent £3.8m on a “brand and data charge” that appears as income in the Ucas accounts.