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Government pledges fairer deal on credit
NEW credit protection will cut down on the "sharp practices" carried out by "ruthless and unscrupulous" money lenders, the Prime Minister pledged today.
Measures in a new Consumer White Paper include banning credit card companies from raising borrowers' limits without their consent to help prevent people running up unaffordable debts.
Restrictions could also be placed on card companies increasing interest rates on existing debt, as part of a review of the credit and store card industry.
Speaking during a visit to a Citizens' Advice Bureau in Sherburn-in-Elmet, near Leeds, Gordon Brown said it was vital consumers were given greater protection to stop manipulation by unscrupulous agencies.
"What we are trying to do is to give individuals better protection against sharp practices that some ruthless and unscrupulous money lenders are engaged in," he said.
"Sometimes people are approached on the doorstep or sometimes through unsolicited credit card cheques when people are not told exactly what full interest rate they will have to pay or what the credit implcations are, and sometimes you have credit card companies marketing cards not clear what the costs and the interest rates are charged for.
"So we need more transparency and want more protection for people in difficulty. We want to make sure people have best protection from personal debt as citizens. We want to give them the protection they need in future and clamp down on sharp practices."
The Government will also consult on whether minimum monthly repayments should be increased to help people repay debt quicker, as well as looking at the order in which debts on cards are repaid, to ensure the most expensive debts are paid off first.
Ministers will also ask the Office of Fair Trading to carry out a review of the market for high cost credit, such as pay day loans and door step lending, which typically charge interest of more than 50 per cent on an APR basis.
New requirements will also be introduced for all lenders to check consumers' credit worthiness before they advance money to them and to explain financial products fully.
The Consumer White Paper also contained measures to strengthen consumers' rights, including appointing a new Consumer Advocate early next year who could help people affected by scams get their money back and lead group court actions on consumer issues.
Unsecured borrowing in the UK has soared during the past decade, with consumers collectively owing more than 230 billion on credit and store cards, overdrafts and loans.
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Sunday 12 February 2012
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