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Credit card cheques to be banned Credit card cheques to be banned
(9 minutes later)
Credit card cheques are set to be banned and a new post created to help ripped-off consumers get their money back, the government has announced.Credit card cheques are set to be banned and a new post created to help ripped-off consumers get their money back, the government has announced.
Measures to assist people facing difficulties with debt and at risk from rogue traders are also in the plans.Measures to assist people facing difficulties with debt and at risk from rogue traders are also in the plans.
Figures from the Bank of England show that UK residents owe £233bn on credit cards, overdrafts and other loans.Figures from the Bank of England show that UK residents owe £233bn on credit cards, overdrafts and other loans.
The government plans - laid out in a White Paper - include the creation of a Consumer Advocate.The government plans - laid out in a White Paper - include the creation of a Consumer Advocate.
Under the plans, he or she would raise awareness of consumer issues and take cases of "national importance" to court on behalf of groups of consumers seeking compensation and refunds.Under the plans, he or she would raise awareness of consumer issues and take cases of "national importance" to court on behalf of groups of consumers seeking compensation and refunds.
Credit cardsCredit cards
Outstanding credit card debt in the UK has reached £54.4bn - a figure that has started to rise in recent months after falling back in the course of last year.Outstanding credit card debt in the UK has reached £54.4bn - a figure that has started to rise in recent months after falling back in the course of last year.
These are particularly tough times for consumers and these measures will give people stronger rights to take action Larry Whitty, Consumer Focus What to expect from a consumer championThese are particularly tough times for consumers and these measures will give people stronger rights to take action Larry Whitty, Consumer Focus What to expect from a consumer champion
The government wants action to make lending practices more responsible, with concerns raised about debt levels during the recession.The government wants action to make lending practices more responsible, with concerns raised about debt levels during the recession.
Credit card cheques are blank cheques sent out by card issuers to their customers, often with a statement, giving them an alternative way to spend on their card account.Credit card cheques are blank cheques sent out by card issuers to their customers, often with a statement, giving them an alternative way to spend on their card account.
They have proved to be controversial because consumers incur handling fees for using them, there is no interest-free period as seen with a card, and they do not command the same level of protection for customers if things go wrong.They have proved to be controversial because consumers incur handling fees for using them, there is no interest-free period as seen with a card, and they do not command the same level of protection for customers if things go wrong.
The government has been under pressure for some time to ban them. It announced earlier in the year that it would ban firms from sending out unsolicited credit card cheques and it now says these will be banned completely.The government has been under pressure for some time to ban them. It announced earlier in the year that it would ban firms from sending out unsolicited credit card cheques and it now says these will be banned completely.
Research from the price comparison website, Uswitch, suggested one in five people had seen their credit card limit increased in the past 12 months without them asking for it.Research from the price comparison website, Uswitch, suggested one in five people had seen their credit card limit increased in the past 12 months without them asking for it.
The government has also announced a review of card fees and charges.The government has also announced a review of card fees and charges.
Help at handHelp at hand
Consumer groups have also called for more help for consumers to resolve issues with businesses who they believe have ripped them off.Consumer groups have also called for more help for consumers to resolve issues with businesses who they believe have ripped them off.
HAVE YOUR SAYHow much is this idea going to cost me and every other taxpayer?Mark, Nottingham Send us your commentsHAVE YOUR SAYHow much is this idea going to cost me and every other taxpayer?Mark, Nottingham Send us your comments
Citizens Advice wanted a Consumer Ombudsman who would resolve individuals' complaints and take command of group action by consumers.Citizens Advice wanted a Consumer Ombudsman who would resolve individuals' complaints and take command of group action by consumers.
Instead a Consumer Advocate role will be created by early next year. The aim is to fill the role with a person who is comfortable taking part in high-profile consumer campaigns as well as representing large groups of consumers in court seeking compensation.Instead a Consumer Advocate role will be created by early next year. The aim is to fill the role with a person who is comfortable taking part in high-profile consumer campaigns as well as representing large groups of consumers in court seeking compensation.
Disgruntled customers who have been ripped off by a business can opt-in to a group legal action led by the Advocate when it first goes to court - or at the point at which a case is successful, according to the plans.Disgruntled customers who have been ripped off by a business can opt-in to a group legal action led by the Advocate when it first goes to court - or at the point at which a case is successful, according to the plans.
"These are particularly tough times for consumers and these measures will give people stronger rights to take action, backed by tough legislation and a powerful Consumer Advocate," said Larry Whitty, chairman of watchdog Consumer Focus."These are particularly tough times for consumers and these measures will give people stronger rights to take action, backed by tough legislation and a powerful Consumer Advocate," said Larry Whitty, chairman of watchdog Consumer Focus.
Ron Gainsford, chairman of the Trading Standards Institute, which represents trading standards officers, said: "The Consumer Advocate proposal is really good news because it will help to further foster a healthy balance between consumers and businesses."Ron Gainsford, chairman of the Trading Standards Institute, which represents trading standards officers, said: "The Consumer Advocate proposal is really good news because it will help to further foster a healthy balance between consumers and businesses."
But the British Retail Consortium said that the new position should not just be a "gesture" and the Advocate should be completely independent.
"Most consumer problems are sorted out face-to-face in store but improving access to the other options that already exist is good for customers and retailers when it leads to a speedier more efficient resolution," a spokesman said.
Affordability issuesAffordability issues
Consumer Minister Kevin Brennan said the plans would cost about £3m a year by 2010/11. He said the funds were available, but he refused to outline whether cuts would be made elsewhere to pay for them.Consumer Minister Kevin Brennan said the plans would cost about £3m a year by 2010/11. He said the funds were available, but he refused to outline whether cuts would be made elsewhere to pay for them.
Also included in the proposals are:Also included in the proposals are:
  • A new team to tackle internet-based scams
  • A fresh look at protection for consumers who paid for goods that were not delivered because the business went bust
  • A credit card comparison website set up by the Financial Services Authority in 2010
  • Talks on credit card and store card charges - such as whether minimum repayment levels are set too low
  • A review of high-cost credit, such as payday loans and doorstep selling.
  • A new team to tackle internet-based scams
  • A fresh look at protection for consumers who paid for goods that were not delivered because the business went bust
  • A credit card comparison website set up by the Financial Services Authority in 2010
  • Talks on credit card and store card charges - such as whether minimum repayment levels are set too low
  • A review of high-cost credit, such as payday loans and doorstep selling.
These short-term high interest loans, with an APR of more than 50%, are often aimed at those who cannot get credit elsewhere.These short-term high interest loans, with an APR of more than 50%, are often aimed at those who cannot get credit elsewhere.
But the government fears that caps on interest rates could push sub-prime borrowers to illegal loan sharks instead as the market would shrink.But the government fears that caps on interest rates could push sub-prime borrowers to illegal loan sharks instead as the market would shrink.
Louise Bond, of Uswitch, told the BBC that the moves were welcome, but said that the government could have gone further by studying issues such as the cost of using credit cards abroad and the number of days offered to pay off debts.Louise Bond, of Uswitch, told the BBC that the moves were welcome, but said that the government could have gone further by studying issues such as the cost of using credit cards abroad and the number of days offered to pay off debts.