Consumer Power: Have your say on the future of consumer credit

Former_MSE_Alana

The government has asked the Department of Business, Innovation & Skills to develop an action plan to encourage better borrowing and lending both for consumers and from lenders.

Consumer credit has been a blurry subject for far too long. Lenders are often incentivised by commission schemes when trying to sell you products rather than what is best for you. There is also a considerable lack of knowledge in managing and dealing with debt effectively which isn't helped by hard selling of expensive credit.

The review looks at various issues such as store cards, bank charges and debt advice, and is asking for your views on these subjects

Full details of this and other consultations in the Consumer Power! guide

Let us know your views...

fermi

Interesting set of consultation questions:

1. Should the Government extend regulations on advertising for credit products beyond the cost of credit?

2. Should consumer credit advertising rules be aligned with those which the FSA applies to secured credit?

3. What would be the impact of a 7-day cooling off period for store cards on (a) consumer behaviour and (b) store card providers?

4. We would in particular welcome your in views on the following OFT recommendations:

- that the Government works with lenders to provide information on high-cost credit loans to consumers through price comparison websites.
- that the Government explores whether there is scope under the European Consumer Credit Directive for a requirement that high-cost credit suppliers must include 'wealth warning' statements on advertisements for high-cost credit
- that the Government works with credit reference agencies to explore ways in which payday lenders and rent-to-buy suppliers could provide suitable information to credit reference agencies about the payment performance of their customers, in turn allowing those with good payment records to use mainstream lenders more easily in the future
- that the OFT collects essential information on the high-cost Credit sector, such as the volume, value and pricing of credit, levels of repeat business and defaults among customers as needed. This will help OFT understand the effect of its recommendations and provide better evidence for future policy making
- that the relevant trade associations for home credit suppliers, payday lenders and pawnbrokers establish a code or codes of practice covering best practice policy including on: complaints and advice to customers, policies on rolling over of loans, limits for amounts to lend to consumers, avoiding misleading consumers through advertisements and ensuring that consumers are aware of the ultimate owners of brand names

5. Is there a need for greater sharing of data between the consumer credit industry and other bodies, including utility companies, local authorities and HMRC?

6. It has also been suggested that there needs to be greater transparency around credit scoring and the impact of credit scores on charges. Do you agree?

7. Which of these stakeholder proposals do you consider would bring benefits to industry or consumers and what would these be? Please provide evidence in support of your view (Annex A).

8. Do you believe that the current voluntary, market-driven initiatives to address concerns about unarranged overdraft charges are delivering, or will deliver, sufficient improvements for consumers? If not, what would the wider implications of limiting bank charges be? Please provide evidence in support of your views.

9. Should interest rates on credit and store cards be subject to a cap? If so, should this apply to all interest rates or only those which apply to existing borrowing?

10. Are there any alternative measures which would reduce the scope for consumers to be exposed to higher interest rates on credit and store cards?

11. How effective have the Competition Commission's remedies been in improving prices for home credit customers? Is further action needed to ensure that consumers of home credit get a fair deal?

12. What role should the court play in the debt recovery process? Should it be restricted to genuine points of law and disputes between the parties?

13. Are court-based enforcement mechanisms fit for purpose? If not how would you like to see them improved or added to?

14. What impact would a £25,000 threshold have on your ability to enforce unpaid debts by means of 1) charging orders and 2) orders for sale? What alternative action might you take?

15. How can debtors be encouraged to seek early support to help manage their debt problems?

16. Do the current debt relief options strike the right balance between the needs of the debtor and the rights of creditors?
17. What problems are encountered with the current range of debt solutions and how could they be improved to ensure all debtors have an option and that the choices are clear?

18. Is there sufficient flexibility within the current range of debt solutions to allow for debtors changing circumstances?

19. Do the current options allow and encourage those who are in a position to repay their debts to do so? If not, why not, and how might any incentives be improved?

20. Do the current options allow a person to deal effectively with a temporary income ‘shock’ and if not, what is needed?

21. Is some form of moratorium on creditor action required to a) allow a short time period for a debtor to seek and act on advice from a qualified adviser and b) allow a more extended period for a debtor suffering from a temporary difficulty to recover and start making
repayments once more. If so, how might such an arrangement work?

22. How does a person find out where to go for debt advice and assistance? What are the advantages and disadvantages of each method?

23. How does a person know that he/she has been given the ‘right’ advice?

24. What evidence do you have to suggest that debtors end up in the ‘wrong’ solution and what is the scale and impact –for the debtor, the creditors, the economy?

25. Is it clear in all circumstances what the ‘right’ solution should be?

26. How often do debtors move from one remedy to another and could the costs be reduced in any way?

27. Should there be more consistency on how a debtor’s income, assets and expenditure are calculated and treated in different procedures?

28. Should any changes be made to improve the consistency of investigation and enforcement action in relation to debtors entering insolvency procedures?

29. What outcomes should such investigations be looking to achieve – for example, should they just relate to restrictions on future conduct or should they also impact on discharge from liabilities?

30. Are the practical effects of entering the different debt remedies satisfactory e.g. future access to financial services? Should this be influenced by the outcome of any investigation/enforcement?

31. Is there a role for a “gatekeeper” to provide a common entry point to all formal insolvency procedures? If so, what would be the benefits and costs, who would perform such a function and how would the system operate?

chattychappy

Yep.. more endless consultation to keep civil servants busy.