Government to Review Consumer Credit

Consumer Affairs Minister Edward Davey has announced a Government review of the consumer credit and personal insolvency industry.  Stakeholders will be given the opportunity to voice their views of what is working well to help the government reshape consumer credit policy.

To be conducted with the Treasury’s Financial Secretary Mark Hoban, areas it will cover include: how consumers enter into credit commitments; issues arising during a loan’s lifetime, and what happens if things go wrong, such as debt management.

“This is an opportunity not only to improve the safeguards on consumer credit products, where this is necessary.  It’s also a chance to cut unnecessary regulatory burdens, which increase costs and stifle competition,” said Edward Davey.

“I want to be sure that people can get fair deals on credit cards, loans and other products on the market – improving access for the financially excluded; having an insolvency regime where those who can, pay, but those who can’t are helped to make a fresh start.”

The review will lead to a full consultation later this year, or early next.  

Citizens Advice Director of Policy Teresa Perchard commented on the announcement: “It is vital that credit is sold responsibly and consumers know exactly what it is they are signing up to.” 

Latest figures from the Finance & Leasing Association (FLA) show consumer credit lending in May is 6% down on May 2009

“The Consumer Minister is right to see this as an opportunity to cut unnecessary regulatory burdens,” said FLA Director General Stephen Sklaroff.

Consumer Focus meanwhile has called for independent monitoring to ensure rises are justified and limitations on the frequency and level of interest rate increases, as part of their input of the review.

“The review is a golden opportunity to swing the balance back in favour of the consumer, who has been losing out for too long,” said Consumer Focus financial services expert Linda Weatherhead.

“We also hope the review will mean an end to the excessive penalties charged by banks for unauthorised overdrafts, and greater transparency on the costs customers are charged for their financial services.”

Source: moneyexpert.com