The Government has pledged to help those who are struggling with credit card and loan debts and will crack down on any credit firms encouraging unsecured debt.

Gordon Brown met with campaign groups and debt advice agencies and promised a White Paper on consumer rights that would make sure that those with debt problems would be protected.

Laws will be written to prevent credit card companies from raising credit limits and sending out credit card cheques to households unless they have been specifically asked for. Also, any borrowers who have already got themselves into dangerous levels of debt can also expect more leniency in regards to repossession and criminal action. New measures will also allow people on low incomes to write off their debts and start again after a year.

Teresa Perchard, director of policy at Citizens Advice says: "This package of measures shows the government has been listening to people's concerns and is responding to the problems they are experiencing as a result of the downturn. It will also help encourage more responsible lending, for example by a ban on raising credit card borrowing limits where this has not been requested and a ban on unsolicited credit card cheques."

Peter Vicary-Smith, chief executive of Which? says: "Credit card companies have been allowed to get away with encouraging people to spend more than they can afford for far too long. Sending people unsolicited credit card cheques and extending their credit limits without being asked, in the hope of tempting them to overspend, is not just irresponsible – it's immoral.

"Stamping out these toxic credit practices is a clear victory for consumers. If the Government moves quickly to stamp out these temptation tactics, it will send a clear message that there is no going back to the irresponsible lending of the past."

SOURCE: CAB, Which?, 17/03/09

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