PM vows to clamp down on lenders (From Haringey Independent)

PM vows to clamp down on lenders

4:15am Monday 15th March 2010 in

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Gordon Brown has vowed to stop credit card firms taking advantage of struggling customers by hiking interest rates.

The Prime Minister said companies would be banned from imposing rate increases as part of a crackdown on "sharp practices".

The package of measures being unveiled on Monday will also include new rules designed to prevent irresponsible lending.

In his weekly podcast, Mr Brown said the bad habits of some banks and credit card firms were putting "extra pressure on you and your household budgets just at a time when finances are tight for many".

"We want not only to empower and protect you, as consumers, but also to make banks and credit card companies behave responsibly and act fairly. And so we will re-write the rules on lending to end the sharp practices which sting so many credit card holders."

The premier said the industry agreed that repayments would now always go to the credit card with the highest interest first - rather than the cheapest as has often been the case. That could help put "hundreds of millions of pounds a year back into your pockets and purses", he insisted.

"We will also give you a statutory right to reject interest rate increases, so that you can keep paying off your old debt at the old rate," Mr Brown said. "And because we're on your side we will ban companies from hiking up the interest rates they charge you - or increasing your credit limit without being asked - if you are struggling to make ends meet.

"And never again should banks and credit card companies encourage you to borrow more than you can realistically repay."

Mr Brown went on: "There will also be new regulations and guidelines to stop irresponsible and unaffordable lending and there'll also be new cooling off periods for consumers offered new credit. Lenders that don't comply will face tough sanctions, like having their licences revoked."

Mr Brown highlighted the launch of a new 'money guidance service' that will be funded by the banks, saying it should help a million people choose financial products and deal with debt. The Government will also give the Citizens' Advice Service an extra £5 million to pay for longer opening hours, according to the PM.