Credit Card Limits & Cheques Under Government Spotlight

Credit Card Limits Proposal

The government could prevent lenders from raising the credit limits of borrowers without consulting them first, according to a new Government Consumer White Paper.

The new White Paper entitled ‘A Better Deal for Consumers – Delivering Real Help Now and Change for the Future’ sets out a framework which will enhance and enforce consumer rights as well as promote fair and responsible lending and borrowing.

Credit Card Cheques

Credit Card Cheques were the primary concern for ministers as they highlighted that without care, consumers could run-up huge bills because of the interest charged on these during the course of a year. Credit Card Cheques would not face a complete ban, however lenders may not be able to send them out without a previous request from the borrower.

According to Direct.gov, the measures include:

a consultation on reforms to the regulation of credit and store cards to help guard against people running up credit and store card debts they can’t pay off

a ban on unsolicited credit card cheques which can tempt consumers to borrow money they cannot afford

a review by the Office of Fair Trading of the market for high cost credit, such as pay day loans and door step lending

the appointment of a new Consumer Advocate responsible for co-ordinating work to educate consumers and to help them get their money back when things go wrong

powers for the courts to ban persistent rogue traders; a new national specialist team to tackle scams which con consumers on the internet; new money to tackle rogue traders operating on a large scale; and a pilot scheme giving Trading Standards officers powers to help consumers get money back

a new self-help tool-kit developed by the Money Advice Trust and a new debtor’s guide from the Insolvency Service to help people in debt take control of their finances.

Government Minister

Consumer Minister Kevin Brennan said:

“We are delivering a new approach to consumer credit with a review of the regulation of credit card and store cards. We are imposing requirements on lenders to explain their products and to check creditworthiness before they lend, and revised OFT guidance to tackle irresponsible lending.
“There will also be tougher action against rogue traders and fraudsters who look for ways to fleece consumers out of their hard-earned cash, and a new emphasis on consumer rights spearheaded by the Consumer Advocate.”

Written by Paul on July 7th, 2009