Government and lenders joint statement on credit summit
Submit Articles Back to Articles
Date: 26 Nov 2008
Secretary of State for Business Peter Mandelson and Consumer Affairs Minister
Gareth Thomas have secured agreement from the credit card industry to help
borrowers struggling with their credit card bills over the coming months.
At a Credit Card Industry Summit at the Department for Business this
afternoon the Government and industry agreed proposals that will give extra
breathing space to struggling borrowers. It was agreed that the credit card
industry would report back in two weeks time on a set of fair principles to help
card borrowers to manage their debts.
The Government and industry agreed the following joint text:
The industry agreed that where a not for profit debt advice agency has
formally notified that a consumer is in serious discussion with that agency on a
draft debt repayment plan then the credit card company will suspend collections
activity whilst these discussions continue provided that they are concluded
within 30 days, with the option of extending a further 30 days subject to
demonstrable progress being made but not yet concluded.
The group made good progress in discussing the issue of risk-based repricing
which is leading to high increases in some individuals' bills. They will develop
a statement of fair principles in two weeks for risk based re-pricing decisions.
Those principles would address issues such as proportionality, frequency and
transparency. The purpose is to help borrowers manage their debts during the
1) Risk based re-pricing is is the industry term for when they change
customers' interest rates because of a change in the risk that a particular
group of customers will default on their loan. It's these sorts of repricing
decisions that have led to the sorts of cases we're unhappy about, where people
have faced very significant increases in their interest rate, sometimes of ten
percentage points or more
2) The Government and industry discussed the issue of risk based re-pricing,
which is leading to some individuals seeing large increases in their credit card
bills. The Government called on the industry to report back with a statement of
principles on risk re-pricing in the next two weeks.
About the Author
© Crown Copyright. Material taken from the BERR- Department
for Business, Enterprise and Regulatory Reform replacing DTI - Department for
Trade and Industry. Reproduced under the terms and conditions of the Click-Use
Follow us @Scopulus_News
Article Published/Sorted/Amended on Scopulus 2008-11-27 12:13:13 in Business Articles