Government bans unsolicited credit card cheques

In a white paper released today, the Government has set out new measures to crack down on persistent rogue traders and to ban unsolicited credit card cheques.

“A Better Deal for Consumers – Delivering Real Help Now and Change for the Future” sets out actions which aim to promote responsible borrowing and lending and provides a longer term framework to enhance and enforce consumer rights in the wider economy.

The paper follows the earlier report, “Building Britain’s Future”, which set out Government’s plans for creating growth and jobs as the economy moves out of recession.

Measures outlined in the new report include:

- A new consultation to address the balance between giving customers choice and protecting the vulnerable with regard to credit and store cards. This will aim to put consumers more in control of their borrowing and to help guard against people running up unmanageable debts;

- A ban on unsolicited credit card cheques, which are known to come with very high interest rates and to tempt consumers into borrowing beyond their means;

- An Office of Fair Trading review of high cost credit, such as pay day loans and door step lending, which can typically come with an APR of 50% but rates of several hundred percent on small loans are also not unusual;

- The creation of a new Consumer Advocate who will be responsible for co-ordinating the financial education of consumers;

- New court powers to ban persistent rogue traders, as well as extra funding to help tackle the problem nationally and via Trading Standards;

- The launch of two new consumer support tools – a self-help tool-kit from the Money Advice Trust and a Debtor’s Guide from the Insolvency Service.

Business Secretary Lord Mandelson said:

“The Government is determined to help consumers during the current economic difficulties. Many family budgets are under unprecedented strain. We’re already providing targeted help to protect people from falling into debt and to support those who get into difficulty. But we need to do more. Our aim is to help consumers make better informed borrowing decisions.”