The National Consumer Council (NCC) has been pressing hard over the last two years to ensure that the promised overhaul gives consumers the protection they need.
NCC chair, Deirdre Hutton, says:
‘Credit is now a way of life. Household debt is at record levels and the range of credit cards available has mushroomed from just one 30 years ago, to around 1600 today. But, with the average household owing over £5000 on top of their mortgage and one in five people reliant on loans and credit cards to pay for household bills, it is vital the new credit regime tackles irresponsible lending and provides robust redress for victims of misleading and unfair selling practices.
‘It must also find ways of increasing access to affordable credit for people on low incomes and of improving everyone’s understanding of credit so we can make better choices. The current system does nothing to protect the one in five households who are systematically denied credit from mainstream lenders. They are too easily exploited by rogue lenders offering quick but more expensive alternatives.’
Among the key changes NCC wants to see in the white paper are:
* A free ombudsman service for all borrowers — to investigate and challenge unfair credit agreements.
* A tougher system for licensing lenders — with higher licence fees to pay for much better policing to help weed out rogue businesses.
* Simple, clear, easily comparable information on the terms of credit (cost, repayment period and so on) - in the form an ‘honesty box’ on promotional material.
* A general duty on lenders, debt collectors and other credit businesses not to trade unfairly - with the Office of Fair Trading (OFT) given powers to ‘stop’ any credit business that is caught trading unfairly.