Government announces measures to tackle debt and protect consumers

A series of measures to assist people facing difficulties with debt as well as the termination of credit card cheques are set to be unveiled by the Government.

The Consumer White Paper is set to be launched by Consumer Affairs Minister, Kevin Brennan, at an event in London, held by consumer group Consumer Focus.

According to Mr Brennan, the new measures will cost around £3 million a year by 2010/11 and will see a new team established to deal with internet-based scams.

Furthermore, a credit card comparison website is to be set up by the Financial Services Authority next year and there will be a review of high-cost credit, such as payday loans and doorstep selling.

The new measures are aimed at protecting consumers from growing debt and rogue traders and come after a survey by price comparison website, uSwitch.com, revealed that one in five people have had their credit card limit increased over the last 12 months without their permission.

uSwitch.com found that the average person has seen their credit limit rise by just over £1,500.

The price comparison site warned that people are tempted to spend more than they can afford if they receive a higher credit limit.

According to data from the Bank of England, UK residents owe £233 billion on credit cards, overdrafts and other loans.

In the meantime, credit card cheques are set to be banned after growing pressure on the Government to ban them.

Credit card cheques can be used like personal cheques, with the value of the transaction added to the borrower’s card balance.

However, they have been the subject of criticism because consumers incur handling fees for using them. Furthermore, there is no interest-free period as seen with a card, and they do not command the same level of protection for customers if something goes wrong.

The measures have been welcomed by many consumer groups and Ron Gainsford, chairman of the Trading Standards Institute, described them as “really good news because it will help to further foster a healthy balance between consumers and businesses.”