White paper on consumer debt slated

THE government&rsquo;s bid to crack down on the credit card industry to reduce the number of people struggling with unsustainable debts has been criticised by a number of bodies who warn it may restrict lending at a time when people need it the most.<br /><br />The Consumer White Paper aims to clamp down on unsolicited credit card cheques, while lenders will no longer be able to raise borrowers&rsquo; credit limits without their consent or increase interest rates on existing debts.<br /><br />CBI Deputy Director-General John Cridland said: &ldquo;Measures to stop reputable lenders being able to change interest rates to reflect customers&rsquo; changing credit ratings could see some people being denied lending.<br /><br />&ldquo;This could come at a difficult time for them, or force them to turn to unregulated lenders.&rdquo;<br /><br />Shadow financial secretary Mark Hoban yesterday said: &ldquo;This is a confused package of measures which doesn&rsquo;t really hit the mark.<br /><br />&ldquo;Issues such as a cooling-off period for store cards and the length of time it takes for consumers to pay off debt in minimum payments have not been tackled at all.&rdquo;<br /><br />The consumer white paper also aims to assist tenants whose landlords are subject to repossession orders.<br /><br />But The Association of Residential Letting Agents (ARLA) yesterday criticised the white paper as being &ldquo;too vague&rdquo;.<br /><br />ARLA president Lucy Morton said: &ldquo;The Government&rsquo;s pledge to legislate at &lsquo;the next opportunity&rsquo; is far too vague, as both landlords and tenants need the government to take action now rather than making promises.&rdquo;<br /><br />Debt charities have warned that a &pound;2,000 credit card debt would typically take 20 years to pay off if the minimum payment was made each month.<br /><br />The average person has seen their credit limit rise by just over &pound;1,500, according to comparison website uSwitch.com.