GOVERNMENT MUST GET TOUGH ON CREDIT CARD COMPANIES - WELSH LIB DEMS (Montgomeryshire Liberal Democrats)

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Montgomeryshire Liberal Democrats <montlibdems@gmail.com>

GOVERNMENT MUST GET TOUGH ON CREDIT CARD COMPANIES - WELSH LIB DEMS

December 11, 2008 12:08 PM

Ahead of an expected announcement on industry agreed principles by credit card companies to give extra breathing space to borrowers, the Welsh Liberal Democrats have today accused the Government of treating the companies with 'kid gloves'.

On 26th November the Government met with credit card companies to agree proposals to give extra breathing space. The companies were given a deadline of this Friday to agree a statement of principles.

Figures out this week show that despite the recent cuts to the Bank of England base rate, credit card interest rates have gone up from 16.6% to 17.7% in the last year. Lord Mandelson last month warned that threatened tough action with credit card companies that failed to pass on rate cuts.

A report by Citizen's Advice Cymru in October revealed that in the past year in Wales the CAB has seen requests for help with credit, store and charge card debts jump by 19%. Average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to £4,965 per average UK adult at the end of September 2008.

A legal loophole, known as a charging order, means that borrowers can potentially be forced to sell their homes to pay off debts, even if these debts are relatively small.

Commenting, Liberal Democrat Shadow Secretary of State for Wales Roger Williams said:

"The cost of credit card borrowing has gone up in the last few months, despite the cuts in interest rates, yet companies who are not responding to the economic hardship many face are being allowed to write their own rules.

"Just like with energy companies that refuse to reduce their bills, and banks that won't lend, the Government are clearly afraid to upset their delicate sensibilities. Contrast this with their harsh rhetoric on people that can't defend themselves, like benefit claimants.

"Debts are being sold on, and charging orders mean that some can even lose their home. Not every one who has a charging order made against them will lose their home, but why should companies that have previously behaved irrationally and irresponsibly before be allowed to make a quick buck now.

"It's about time the Government took some real action on the companies that are making people's lives harder in the recession. They must stop treating these companies with kid gloves."

Montgomeryshire MP Lembit Öpik added:

"The acceleration in personal debt over the last few years has been one of the key drivers of the economic turmoil we face today.

"There is a need for improved financial education so that people don't find themselves with huge debts, but equally those who have been responsible about their credit card use shouldn't be hit by unjustified rate increases.

"Credit card companies need to treat their customers properly, and if they won't the Government need to take tough action, not just talk about it. We all have to work together to get through the hard times ahead.

"Gordon Brown might think he's saved the world, but there are a lot of serious problems that people across Wales face that he will need to get a grip of before he can say that."

ENDS