Govt To Overhaul Credit Card Companies

[blueotter]

Link here

BBC NEWS | Business | Credit card terms 'to be curbed'

 

About time they got involved but remains to be seen what will be done,suffice to say that hwen the govt finally admits to there being a problem,you know there really is a problem.

 

 

Some unfair credit card terms are to be outlawed under proposals being put forward by the government. It wants to stop card firms raising interest rates on existing debts and to prevent them raising someone's spending limit without authority.

Monthly repayments must be used to pay off the most expensive debts first, and the size of minimum repayments will be raised to ensure faster debt repayment.

The body representing UK card issuers said it would study the proposals.

"We need to be able to demonstrate what impact these would have on consumer choice and the costs to customers of using credit cards," said Melanie Johnson, chair of the UK Cards Association.

"We will be reviewing the evidence and we expect the government to do the same.

"These proposals risk disadvantaging more customers than they protect," she added.

'Exploited'

The government said that credit and store companies had to "clean up their act" because the relationship between card companies and their customers was "unfair" and should be challenged.

 

"It is not acceptable for card companies to impose complex and confusing terms and conditions that can leave people baffled, or to increase interest rates without proper explanation," said Consumer Minister Kevin Brennan.

 

"Consumers should not feel each month as if they have been exploited or disadvantaged," he added.

The latest proposals, which are now being put out to consultation by the Department for Business Innovation and Skills (BIS), include:

• changing the order of priority for credit card repayments, so that the most expensive debts, such as cash advances, are paid off first

• increasing the minimum amount that must be paid off each month to accelerate the overall rate of repayment

• banning the practice of raising borrowers' credit limits without their prior consent

• restricting or banning increases in interest rates on debts already incurred.

Culture change

The government's proposals were welcomed by consumer organisations.

 

We see far too many people on low incomes who have drifted into very high levels of borrowing as a result of unsolicited increased access to credit

 

 

Teresa Perchard, Citizens Advice

 

 

"For too long, card companies have been allowed to apply the tricks of their trade to the detriment of millions of consumers," said Phil Jones of Which?

"We think it's simply wrong to entice people into spending more than they can afford and then to squeeze as much money out of them as possible."

Malcolm Hurlston of the Consumer Credit Counselling Service (CCCS), said: "The government has put its finger on the four main problems that consumers have with credit card debt."

"We believe that the banks should be able to change their practices on each of these but if they can't, regulation will be necessary," he added.

Teresa Perchard of Citizens Advice said new enquiries about credit, store and charge card debts was the biggest group of problems that people brought to CAB offices last year.

"In particular we see far too many people on low incomes who have drifted into very high levels of borrowing as a result of unsolicited increased access to credit.

"Together these measures could result in a significant long-term culture change where increases in credit limits are customer driven and people are no longer sleep walking into debt," she added.

'Fair principles'

The government's latest plans follow other limits on credit card practices brought in earlier this year.

These ideas came after a government-organised "credit card summit" in November last year, at which card companies agreed to a set of "fair principles".

Among other things, they agreed to stop raising interest rates when a customer fell behind with their repayments.

The government also pledged to ban the issuance of unsolicited credit card cheques and legislation to do this is now going through Parliament.

[blueotter]

Among other things, they agreed to stop raising interest rates when a customer fell behind with their repayments.

 

I've just read this last line,when in heaven did they ever comply with this ? and if they were meant to do so ,is there a form of words or some act that can be used to complain

[Belaflat]

Too late for me, Halifax have ramped my Platinum from 14.9% to 29.9%.

Greedy grasping bar stewards.

[angry cat]

Clean up their act?

 

That is an understatement!

[angry cat]

bumping this up; important!

 

http://news.bbc.co.uk/1/hi/business/8326485.stm

[Huff&Puff]

The body representing UK card issuers said it would study the proposals.

"We need to be able to demonstrate what impact these would have on consumer choice and the costs to customers of using credit cards," said Melanie Johnson, chair of the UK Cards Association.

"We will be reviewing the evidence and we expect the government to do the same.

"These proposals risk disadvantaging more customers than they protect," she added.

 

Translation: "This will hurt our obscene profits, so we will find any excuse, and fight tooth and claw, to prevent any such action"

[angry cat]

The Consumer Credit Directive cometh:

 

http://www.berr.gov.uk/whatwedo/consumers/consumer-finance/credit_regulation/ec-directives/page29927.html

Edited October 27, 2009 by angry cat
error

[rhos123]

The government's latest plans follow other limits on credit card practices brought in earlier this year.

These ideas came after a government-organised "credit card summit" in November last year, at which card companies agreed to a set of "fair principles".

Among other things, they agreed to stop raising interest rates when customers fell behind with their repayments.

yea the halifax are still robbing me!!!:mad:

[angry cat]

They have been robbing us all for years!

[veryweary]

MBNA must be the worst for setting minimum monthly repayments which keep you paying these cards off for a lifetime.

 

Many years ago had a card where the minimum repayment asked for each month was £200 , but the interest applied was £185. If that was what I paid each month, then I only reduced the total balance by £185 per year but MBNA kept £2220 to themselves per year for interest.

 

No wonder people run out of money and can't ever repay these credit cards:mad:.

 

So I hope they have to set higher repayment figures too.

[Linus]

As angry cat said they have indeed been robbing us for many years, thats why when I fell into the debt pit, I destroyed all my cards, got a basic bank account, I have not had any credit for 2 years now (not that I could, my credit score is as black as a gorillas ping pongs:D), and after my experiences my rule is "if I aint got it, I cant spend it",

 

The customers make millions for the banks and card companies, but when you have any difficulty they cant walk away from you quick enough.

[angry cat]

An old article but relevant:

The UK's Most Dangerous Credit Cards!

[angry cat]

http://www.freshfields.com/publications/pdfs/2009/jun09/26008.pdf

[nks22]

Consultation here:

 

Comment on the credit and store card consultation – Department for Business, Innovation and Skills

[angry cat]

http://understood.dreamhosters.com/wp-content/uploads/2009/10/Simply%20Understand%20-%20Credit%20and%20store%20cards%20consultation.pdf

 

http://www.berr.gov.uk/consultations/page53299.html

[nks22]

No mention of interest rates, though, other than 'the re-pricing of existing debt'. Perhaps they need to consult on what to include in the consultation.

[hacksaw]

I am monitoring this very closely. I've been affected by the allocation of payments more than bank charges.

 

I am even thinking about a challenge under the UTCCR. How could a term, stating that the cheapest debt is to be paid first, possibly be fair? Even if the government introduce legislation, its unlikely to be retrospective.

Edited January 18, 2010 by hacksaw
Added UTCCR

[Guest HeftyHippo]

Probably far better would be to change legislation so that ALL lenders have to provide a copy of the signed agreement, and to give borrowers somewhere with teeth to complain to when lenders start all the tricks that we experience - phoning multiple times a day, ignoring your wishes to put things in writing, ignoring the law, telling you this or that rule/reg/law doesn't apply when it does. ignoring your letters, issuing repeated threats of legal action, passing the debt to DCAs when in dispute, passing the debt to other DCAs so the cycle starts again.

 

After all, how many threads on here are from people complaining about the low minimum payments, or their credit limits? We have the option to pay more if we like, and we don't have to spend up to the max, those are our choices, but we can't stop the dishonest tricks being used against us, and the OFT and FOS are either toothless, disinterested or incompetent. Or maybe all 3 (and more).

 

Better regulation of the way they do business is needed, as they don't respect the existing laws. They'll only find loopholes round the 'code of practice' they dream up.