Conservatives to warn of personal debt crisis
The UK’s £1 trillion of unsecured personal debt is a ticking “time bomb” threatening the prosperity of millions of Britons, the Conservatives will warn today.
Vulnerabilities to the market from a sharp hike in oil prices, acts of terrorism and wars may imperil the housekeeping of 15 million people through increases in unforeseen levels of debt repayments, the report commissioned by Shadow Chancellor Oliver Letwin finds.
The Debt Commission – chaired by Lord Griffiths of Fforestfach, a vice-chairman of Goldman Sachs International and a former director of the Bank of England – criticises banks and credit card firms for irresponsible lending.
The commission calls for new laws to protect borrowers.
Top the agenda is a Statutory Bank Customers Charter to replace the Voluntary Banking Code, as well as clearer credit charges and a clampdown on firms aggressively marketing credit.
The report says the scale of consumer debt has rendered millions of households “extremely vulnerable” to shocks in the economy.
Speaking on BBC Radio Four’s The World this Weekend, Lord Griffiths said: “I think there has been an unlevel playing field between the banks and their customers.
“And I think frankly the rights of their customers need to be strengthened.
“At present there is a voluntary banking code, about for example their transparency on charges, the way they market and so on, and we would like to see a statutory bank customers’ charter, which gives customers greater rights.
“The ultimate responsibility for taking out a loan must rest with the individual. On the other hand, we know that the marketing has been very aggressive.
“The banks have said themselves that they haven’t been transparent in providing the information and we believe that individuals in this market do need a certain degree of protection. That you can’t simply have a free-for-all.”
