Government to prevent credit card companies lure users into higher debts

Attracting customers into higher borrowing by credit card firms will be outlawed by the Consumer White Paper to be published today. Particularly, raising credit limits without the prior approval of customers will be prohibited while credit card firms will be obliged to stop sending unsolicited credit card cheques through the post. Moreover, rise of interest rates on existing debts will be unlawful for credit card firms while they will be retained from putting repayments towards the cheapest debts.  

With the purpose of eliminating the number of calls of deceived people which has reached 28,000 calls in the first three months of this year, proposals regarding online scams will be included into the White Paper as well. People who have been deceived may enjoy the help of an advocate while a new team of police, trading standards and Office of Fair Trading officials will be established to collect resources to oppose scammers. The proposals contained in the White Paper will be reviewed for three months.  

While these proposals seem to benefit consumers, a contradicting view has been expressed by Finance and Leasing Association which said that the matters could get worse due to the change.  
 
Citizens Advice is encouraging the Government to make it obligatory for all creditors as well as the Government itself to give a “30-day breathing space” to borrowers who have difficulties with repayments in order to seek debt advice. It should be reminded that currently only credit card providers are obliged to do this. Furthermore, Citizens Advice is calling to stop charging orders on small debts.