(qlmbusinessnews.com via bbc.co.uk – – Mon, 25 Sept 2017) London, Uk – –
Legislation limiting the amount of interest that can be charged on credit card debts is being promised by the Labour Party.
Under the changes, nobody would pay more in interest than they had originally borrowed.
Shadow chancellor John McDonnell says more than three million people are “trapped” by credit card debt.
He will unveil the planned change in the law in a speech at Labour’s conference in Brighton.
Labour said the changes would work in a similar way to measures on payday loans, which came into force in 2015.
The Financial Conduct Authority has called for new measures to help people in “persistent debt” as a result of credit cards.
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The regulator says over three million people are in persistent debt, which it defines as having paid more in interest and charges than they have repaid of their borrowing over an 18-month period.
Labour said its “total cost cap” would help “tackle the persistent debt spiral”, claiming growing consumer debt was becoming a “threat to our economy”.
Addressing delegates in Brighton, Mr McDonnell will say: “The Financial Conduct Authority has argued for action to be taken on credit card debt as on payday loans.
“I am calling upon the government to act now apply the same rules on payday loans to credit card debt.
“It means that no-one will ever pay more in interest than their original loan.
“If the Tories refuse to act, I can announce today that the next Labour government will amend the law.”
UK Finance, which represents the financial and banking industry, said it was committed to responsible lending and that consumer credit was important for economic growth.
It added that “the last thing the industry wants is to see those who are most vulnerable being pushed towards the hands of unscrupulous and unregulated lenders”.
When the FCA called for action in April, the UK Cards Association, which represents the major credit card providers, said the industry was “committed to helping the minority of cardholders who do not use a credit card in a way which is in their best interest”.
The Conservatives said action was already being taken to outlaw “rip-off credit card charges” and ensure companies help customers clear debt.
On day one of Labour’s conference, the party’s position on Brexit came under scrutiny as leader Jeremy Corbyn faced calls to keep the UK in the EU single market – and some MPs expressed anger as no motions on Brexit were selected for debate on the floor.
Brexit Secretary Keir Starmer will speak in the auditorium on Monday, when he is expected to say the Tory approach to negotiations on leaving the European Union reveals the “post-imperial delusions” of Theresa May’s party.
Instead, he will promise a promise a “democratically legitimate and economically sensible” approach.