Strengthening regulation on credit card companies
30th October 2009
Southampton’s Labour MPs, John Denham and Alan Whitehead, are supporting tough action to end unfair lending terms by credit card companies.
The proposals put forward by the government aim to ensure that consumers get a fair deal and have access to the information they need to make well-informed decisions about their personal finances. The proposals include:
- Prohibiting the practice of increasing credit limits without prior consent
- Banning unasked for credit card cheques
- Placing restrictions on increasing the interest rate on existing debt
- Raising the minimum monthly repayments levels to encourage people to pay off their debt faster
- Changing the rules so that the most expensive debt on your credit card is paid off first. (Currently most credit card companies make you pay off the cheapest debt first.)
John Denham, MP for Southampton Itchen said:
“Some of the repayment rules for credit and store cards are not working in the best interests of consumers and can cause those already in financial difficulties to get deeper into debt. This can’t continue.
“People have a serious responsibility to manage their finances effectively, but they also have a right to clear and unambiguous information about their finances from the credit companies to enable them to do that. We must do more to ensure the balance is right.”
Alan Whitehead, MP for Southampton Test added:
“I am particularly concerned by the practice of credit card companies increasing interest rates without proper explanation. Consumers using their cards responsibly and making payments on time should not pay the price for excessive risk-taking by financial institutions. So I will push for the Government to ban or at least restrict the re-pricing of existing debt."
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