DEBT: Students mortgaging their futures, says Cable

12.00.00am BST (GMT +0100) Thu 18th Sep 2003

Vincent Cable MP, Liberal Democrat Shadow Secretary of State for Trade & Industry

Liberal Democrat Trade and Industry spokesman Vincent Cable MP, has launched a a seven point plan to warn students of the dangers of debt.

The plan sets out the steps that need to be taken in order to curb the excesses of consumer credit that are contributing to the imbalances in the UK economy.

Dr Cable said: "Students are especially vulnerable to debt. With loans and overdrafts, the last thing they need is a love-affair with credit cards. Students may find they have mortgaged their future."

"Having a free economy must mean that there is a fair, proper market for credit. But aggressive promotion of credit aimed at vulnerable consumers is both immoral and dangerous."

"Unaffordable debt can be unforgiving. Students must understand the stark reality of over-committing."

Dr. Cable's recommendations are:

1. Curb the tidal wave of unsolicited credit promotion by demanding a prominently displayed 'Credit Health Warning'.

2. Ban the practice of sending unsolicited application forms for credit cards, loans and other credit products.

3. Crack down on exploitative loan sharking, with tough legislation to tighten up the issuing and monitoring of credit licenses, coupled with harsher penalties for those guilty of bad practice.

4. Outlaw completely any early settlement penalty to encourage the clearance of debt ahead of schedule.

5. All credit products must be brought within the regulatory control of the Financial Services Authority - including those marketed as debt management solutions and home reversion equity release schemes.

6. The publication by the Government of strict measures for responsible lending, which lenders must be required to observe.

7. Excessive interest rates on store cards and credit cards to be policed far more vigorously by the competition and trading authorities.