Julian Knight: Forget the soft soap, this plot to wipe debt is just greedy

Escaping what you owe on credit cards is a long way from refusing to pay bank charges
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The Independent Online

In my email system is the usual collection of crucial info, spam, dull announcements and the downright bizarre.

To be honest, the weird ones are usually my favourites. Included in this category are regular emails from the British Toilet Association – the winner of the Loo of the Year competition was the Eastgate shopping centre in Basildon, by the way – an invitation to take part in a Kent-based, women-only boot camp called GI Jane, and then last week a little nugget headlined: "Coronation Street star is consumer champion." That's a must-read in my world view. What was it? Well, actor Michael Le Vell, who plays grumpy mechanic Kevin Webster in the soap, is also, it turns out, a director of claims management group Ratio Money.

Ratio is busily engaged in trying to get people's credit-card debts written off due to a loophole in the Consumer Credit Act. The press release says that Mr Le Vell's firm had just got a client out of a £15,000 credit-card debt. "We believe thousands of people in this country who have loans and credit-card agreements that do not comply with the law can look to have their debts written off and any adverse credit rating removed from their records," the actor was quoted as saying.

This is not an isolated case; firms such as Mr Le Vell's are on the look-out for those who would like to escape their debts. To my untrained eye, the legal position of the claimants looks fuzzy and I can't say whether a test case would see them win or lose. At present, many of the lenders seem to be taking the same approach as to the original unfair bank charges claims a few years back and dropping their opposition when the cases come to court.

But this is where the similarities end. The moral darkness behind bank charges was that they were massively over-inflated, designed purely to boost bank profits, and they resulted in misery for thousands of consumers. With credit-card debts, the individual has had the money and now wants to get out of what they owe on, frankly, a technicality. For me, this trend represents nothing more than greed of the worst sort. If you borrow money, you have a moral duty to pay it back, period. There will be no campaign like we saw over unfair bank charges over this issue, regardless of the soft soap of the claims management companies.

What price conscience?

I'm often asked for advice on money matters, it comes with the territory. Last week, a friend wanted to know which fund was best for her workplace pension. Now she has a choice of 80-odd funds, but her employer – a charity – has said that it "approves" of only one of these funds, for being ethical. But a quick scan of the charges shows it to be one of the most expensive to invest in. With a pension, charges are absolutely crucial. Even a fraction of a percentage point on or off the annual management charge can equate to a few thousand pounds over the 30 or 40 years a pension runs. In fact, a look at the universe of ethical funds and their charges shows that they can be more expensive than their less-green counterparts. In short, as with organic produce, you're expected to pay extra for indulging your conscience.

Ceiling our fate

Public-sector pensions have a combined deficit of £1.1 trillion, the Policy Exchange revealed last week. That's more than the national debt and is utterly unsustainable. The Lib Dems want an urgent review of pay and pensions in the private versus the public sector and they are quite right. But I'd go further than this and freeze the pension schemes now in advance of any review. If you have a leak at home which threatens to bring the ceiling down you turn the water off first then investigate what has caused the problem and how to repair it. However, this Government of the living dead won't do anything about this most crucial of issues and, with every day wasted, the deficit grows.

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