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Citizens Advice response to the credit card review

15 March 2010

Citizens Advice Director of Policy Teresa Perchard said:

"The Government is right to announce these steps which could help to secure a fairer and more responsible approach by credit card providers in future.  Credit cards play a major part in the debt problems experienced by CAB debt clients.  Too often we have seen situations where individuals’ credit limits have drifted up to totally unaffordable levels, making it impossible for them to address their debts if they lose their job or hit a financial crisis.  In addition the level of minimum payments has not always enabled consumers to keep up with the interest, let alone repay some of their borrowing and it has not been fair for the companies to decide whether to allocate payments to the cheapest or most expensive borrowing on the card.   We are pleased that the Government will tackle these issues and now agrees with us that unsolicited increases in credit limits can be problematic for consumers.  Ideally we would like to see credit card providers required to obtain consumer consent to all credit card limit increases.

"Changes to the lending code to improve support for people whose circumstances have changed are also welcome. However, not all creditors are bound by this voluntary code, so the proposals for statutory debt management plans contained in the Tribunals, Courts and Enforcement Act need to be implemented to ensure that all creditors treat people who are trying to pay off their debts fairly.  

"A lot of work remains to be done to make sure people who engage with their creditors, get advice, and pay what they can afford are protected from harsh and aggressive debt collection and enforcement.  We welcome the opportunity to work with government and the credit industry to improve communications with borrowers and to ensure they get a fair deal."

Notes to editors

  1. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more information in England and Wales see www.citizensadvice.org.uk
  2. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality. For online advice and information see New windowwww.adviceguide.org.uk
  3. Citizens Advice Bureaux in England and Wales advised 2.1 million clients on 7.1 million problems from April 2010 to March 2011. For full 2010/2011 service statistics see: www.citizensadvice.org.uk/press_statistics
  4. Out of 22 national charities, the Citizens Advice service is ranked by the general public as being the most helpful, approachable, professional, informative, effective / cost effective, reputable and accountable. (nfpSynergy’s Brand Attributes survey, May 2010).
  5. Most Citizens Advice service staff are trained volunteers, working at around 3,300 service outlets across England and Wales.