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Tories outline debt-busting plans Tories outline debt-busting plans
(about 2 hours later)
The Conservatives are to propose measures to tackle Britain's growing personal-debt crisis, including making changes to the home-credit market. The Tories have outlined a six-point plan to tackle the growing personal debt "crisis" among people in the UK.
The plans, to be unveiled by shadow chancellor George Osborne, include a seven-day "cooling off" period for store cards. They want people to better understand financial matters, with banks and credit card companies lending more responsibly and being more transparent.
Speaking at a Tory-led summit, he will also propose lessons in financial management for those aged 11 to 18. Shadow chancellor George Osborne also called for a seven-day "cooling off" period when store cards are acquired.
Experts and leading figures from the debt sector will also be speaking. He claimed British people owed £212bn, excluding mortgages, and nine people were declared bankrupt every hour.
Mr Osborne is expected to say that politicians, organisations and individuals must work together to fight the debt crisis. Speaking at a Tory-organised debt summit in London, Mr Osborne said he had six "robust and sensible proposals" to promote personal debt as "an issue of social responsibility".
"It is increasingly clear Gordon Brown has not done enough. Insolvencies are up, bankruptcies are up, and the numbers of people struggling to cope are up," he will say. Action to tackle "the low levels of financial literacy and awareness" was needed because "a well-informed public is better-placed to borrow responsibly", he said.
People need to be better informed about financial matters in order to avoid getting into unmanageable debt Teresa Perchard, Citizens Advice Bureau TORIES' SIX-POINT PLAN 1. Tackle financial illiteracy2. "Cooling-off" period on store cards3. Greater corporate responsibility4. Clearer information on cost of debt5. Look at advertising code for Individual Voluntary Agreements (IVAs)6. More competition within "door-to-door" credit firms
Under the proposals, home-credit companies would be required to share credit-history data on their customers. "As well as promoting individual responsibility, it's also important to encourage greater corporate responsibility," he said, calling on greater sharing of data so banks had a "full financial picture" on customers before agreeing to lend them more money.
The Conservatives believe this would introduce more competition into a market, which is worth £3bn a year. "We should not allow people to take out that tenth credit card without the credit card company knowing about the other nine."
Mr Osborne will say the plan for store cards would "give consumers the opportunity to think about whether other forms of credit, such as an overdraft extension or conventional loan, might be more appropriate". Mr Osborne said the plan for store cards would "give consumers the opportunity to think about whether other forms of credit, such as an overdraft extension or conventional loan, might be more appropriate".
Lessons for school students on money management would help counter "low levels of financial literacy" among the young, he will say. Lessons on money management for school pupils aged between 11 and 18 were needed, he said, claiming that only 53% of teenagers have been received any kind of teaching about how to organise their finances.
Unmanageable debt Mr Osborne also called for tighter restrictions to be placed on Individual Voluntary Agreements (IVAs).
Mr Osborne is also due to call for tighter restrictions to be placed on Individual Voluntary Agreements (IVAs).
These are legal contracts between lenders and borrowers to pay off a reduced amount of a debt, but can leave the consumer with a poor credit rating.These are legal contracts between lenders and borrowers to pay off a reduced amount of a debt, but can leave the consumer with a poor credit rating.
People were being "ill-advised" about these, Eric Leenders, the executive director of the British Bankers Association, told BBC Radio 4's Today programme. 'Thorough assessments'
People have got to take responsibility for managing their own affairs British Chambers of Commerce director general David Frost Earlier the British Bankers Association warned that people were being "ill-advised" about these.
"Frankly, suggesting that 90% of your debt will be written off is simply misleading," he said. "Frankly, suggesting that 90% of your debt will be written off is simply misleading," , Eric Leenders, the executive director of the British Bankers Association, told BBC Radio 4's Today programme.
"Many people are concerned about the sort of advice people are being given.""Many people are concerned about the sort of advice people are being given."
Mr Osborne will say that clearer explanations on credit-card statements are needed to show consumers the cost of the debt they are running up. Citizens' Advice policy director Teresa Perchard agreed that people needed "to be better informed about financial matters in order to avoid getting into unmanageable debt".
Citizens Advice Bureau policy director Teresa Perchard said: "People need to be better informed about financial matters in order to avoid getting into unmanageable debt."
But she added there was also a "strong responsibility on lenders to look thoroughly at a person's ability to pay before giving them credit".But she added there was also a "strong responsibility on lenders to look thoroughly at a person's ability to pay before giving them credit".
British Chambers of Commerce director general David Frost said limits on store cards would not work.British Chambers of Commerce director general David Frost said limits on store cards would not work.
"You don't have to take out a store card. There is clearly an issue here of personal responsibility," he told the Sunday Telegraph."You don't have to take out a store card. There is clearly an issue here of personal responsibility," he told the Sunday Telegraph.
"People have got to take responsibility for managing their own affairs.""People have got to take responsibility for managing their own affairs."