Easy Credit Boom Is Bailiff's Bonanza

10.41.05am BST (GMT +0100) Tue 14th Oct 2003

Vince Cable MP, Liberal Democrat Shadow Chancellor

A report by Leeds University Business School suggests there has been a 70% rise in credit arrears over the past 2 years, with twenty million cases being passed to bailiffs in the past year. Vince Cable MP, Liberal Democrat Shadow Chancellor, said: "This important report is further evidence that people are over extending themselves in the rush to cheap and easy credit."

"Household debt has leapt by 50% under this Government, fuelled by low interest rates and aggressive promotion by lenders. People are sitting on a debt time bomb."

"When the bailiffs are being called in to deal with debt arrears a staggering 20million times a year, the alarm bells in the Treasury must be ringing."

"Labour's proudest boast is they have abolished boom and bust. But these figures suggest it is only a matter of time before the debt boom is followed by a painful debt bust"

ENDS

Last month, Vince Cable launched a "7 point plan" for dealing with debt. Dr. Cable's recommendations are:

1. 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.

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

3. 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.

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

5. Excessive interest rates on store cards and credit cards to be

policed far more vigorously by the competition and trading authorities.

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

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