Credit Card Reforms Good for Consumer says MP
Delyn MP David Hanson today welcomed the Government’s agreement with the credit and store card industry as good news for people in Delyn.
The agreement means that, in the future, consumers’ most expensive debt – like withdrawing cash on a credit card – will be able to be paid off more quickly, there will be better repayment plans available to customers, a ban on credit limit and rate increases for people at risk of financial difficulty and a right to 60 days to reject interest rate increases.
David Hanson said:
“Today’s announcement is an important step forward for local people’s rights in terms of managing their own finances, delivered by a Labour government. It’s estimated that these reforms will save the average credit card user around £224 a year and consumers UK-wide well over £300m a year. This is an important boost to individuals and families coming through the financial downturn.”
Prime Minister Gordon Brown said;
“Step by step, we are reinventing the financial services industry after the global financial crisis and moving the balance of power back towards consumers. These new rights will put an end to the irresponsible lending practices that people have been most concerned about, and help cut the cost of borrowing.“
Consumer Minister Kevin Brennan said;
“This is a big win for consumers and helps to put them back in the driving seat with their finances. When we asked the public what changes they wanted to see we discovered most people did not know the charges worked this way. They thought it was unfair and confusing, and they naturally wanted to pay off their most expensive debts first.
“This is a fair framework of rights and rules that makes sure easy and convenient lending for the majority doesn’t lead to unmanageable debt for the minority who may be in financial difficulty.“
1. The joint statement between the Department for Business, Innovation and Skills and the credit and store card industry, the Government response to its consultation on credit and store card regulation and supporting documents, including a Plain English version, can be viewed at: http://www.bis.gov.uk/creditconsultation/response
2. The credit and store card review was announced in the Consumer White Paper published on July 2nd 2009. The Government’s proposals were open to public consultation from October 2009 to 19 January 2010, attracting almost 5,000 public comments and votes in an online survey.
3. Government estimates that consumers will gain £296m a year from changes in the agreement. The savings to individual card holders depend on how much they owe and repay and for some it could save hundreds of pounds. Nationwide expects the changes will give consumers £500m a year and say a typical customer would save £224 in their first year after transferring £2,020 at 0% (the average transfer) and making average use and repayments on the card.
4. The credit and store card industry will work with consumer groups and debt advice agencies to agree how they will identify at risk consumers who will be protected from increases in their credit limit or interest rate and to ensure communications are clear and easy to understand. This detail will be agreed by June to allow time to make the necessary systems changes.
5. The ECCD regulations will come into force in the UK as of 1 February 2011. Lenders will have from April 2010 until 31 January 2011 to comply with the new provisions, but are encouraged to offer consumers the new rights as early as possible.
6. The Ministry of Justice has been working with the British Bankers’ Association (BBA) and the Consumer Credit Counselling Service (CCCS), with input from Citizens Advice (CitA) to develop a new way to help people who suffer an unexpected ‘income shock’ such as redundancy, reduced hours or illness. For further information on additional measures to help debtors by those organisations who follow the Lending Code, please contact the British Banker’s association Press Office on 020 7216 8989 or Frances Walker, Head of Media and Public Affairs at CCCS, on 077717 88713
7. The Social Fund Green Paper proposes a package of reforms designed to create a Fund that: makes it easier for customers to get one-off or occasional support; provides more support to frequent users of the Fund to help them tackle the underlying problems they face; and provides better value for money for the tax payer by reducing the number of frequent users. Full details will be available by noon at: www.dwp.gov.uk/consultations/2010/social-fund-reform.shtml
8. Consumers have a statutory right to access their credit reports under the terms of the Consumer Credit Act 1974. The charge under the statutory scheme is £2, covering a proportion of the administration costs.
- For information about issues relating to personal credit reports consumers can contact the Information Commissioner’s Office at (http://www.ico.gov.uk/) or the Financial Services Authority’s Moneymadeclear website http://www.moneymadeclear.fsa.gov.uk/