Banks face call for credit card curbs

Griffiths Commission urges new laws to protect borrowers * £1 trillion debt 'time bomb' threatens millions

New laws to penalise banks that encourage their customers to take on too much debt are called for today in a report produced by a former head of the Downing Street policy unit during the Thatcher era.

New laws to penalise banks that encourage their customers to take on too much debt are called for today in a report produced by a former head of the Downing Street policy unit during the Thatcher era.

Lord Griffiths of Fforestfach, a Tory peer, says the voluntary banking code should be replaced by a statutory bank customers' charter which would outlaw the aggressive marketing of credit and force banks to be much more transparent about charges for credit.

The Griffiths report, commissioned by the shadow Chancellor Oliver Letwin, also recommends that banks be made to share data with one another to prevent borrowers from running up huge debts on multiple credit cards.

The report comes as Britain's high street banks face increasing criticism over their bumper profits and the ease with which borrowers can take on personal debt, which now stands at more than £1 trillion or £17,000 per head of population.

Although the vast bulk of this debt is secured against housing, unsecured debt such as personal loans and money borrowed on credit cards is rising at a faster rate than secured debt. The Griffiths Commission on Personal Debt describes this as a "time bomb" which could affect as many as 15 million households in the event of a sudden economic downturn.

"The sheer scale of consumer debt has made millions of households extremely vulnerable to shocks in the economy, both from fiscal mismanagement and external factors such as oil price rises, acts of terrorism and wars," says the report. "Credit is far too easily available in the UK. Banks market credit too aggressively and protect their own risks but not those of their customers."

Mr Letwin welcomed the report but stopped short of saying whether the Tories would implement its main recommendation for a statutory bank customers' charter if they won power. "The Griffiths Commission has undertaken a very serious piece of work which reveals equally serious social problems," he added. "A Conservative government would certainly consider this report and its implications."

Recent tragic deaths have highlighted the debt trap which thousands of borrowers have fallen into. In one case a 65-year-old grandfather and self-employed mechanic, Richard Cullen, killed himself after running up £130,000 of debt over a six-year period using 23 different credit cards - four of which were issued by the same bank. In another case, Scott Smith, of Norfolk, who was deaf and in part-time employment, killed himself after getting £10,500 into debt.

The £30bn of profits which Britain's five big high street banks made last year have helped shine a light on the growth in unsecured debt, which rose 13 per cent last year and now stands at £56bn. So have the marketing tactics of doorstep lenders such as Provident Financial, which is preparing to mail several million UK homes - including those which struggle to get credit elsewhere - offering its Vanquis credit card, which charges average interest of 49.9 per cent on uncleared balances.

Lord Griffiths said yesterday that the playing field had been tilted too long in favour of the banks and it was now time for the rights of customers to be strengthened in the face of the "very aggressive" marketing tactics of the banks. "I'm all in favour of the free market but I also believe there are areas where the consumer needs protection and this is one."

One of the developments which concerns Lord Griffiths is consumers' ability to borrow large sums through internet banks without ever being interviewed face to face. The report calls for more personal contact between borrower and lender when it is marginal whether to grant a loan.

Suggested Topics
PROMOTED VIDEO
News
Angelina Jolie with her father Jon Voight
people
News
Bill Kerr has died aged 92
people
Sport
footballPremiership preview: All the talking points ahead of this weekend's matches
Arts and Entertainment
Warner Bros released a mock-up of what the new Central Perk will look like
tv'Friends' cafe will be complete with Gunther and orange couch
News
Keira Knightley poses topless for a special September The Photographer's issue of Interview Magazine, out now
people
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
News
i100
Sport
Mario Balotelli pictured in his Liverpool shirt for the first time
football
Life and Style
tech
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SAS Business Analyst - Credit Risk - Retail Banking

£450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...

Project Manager - Pensions

£32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...

KYC Analyst, Birmingham - £200-£250 p/d

£200 - £250 per day + competitive: Orgtel: KYC Analyst, Key Banking Client, Bi...

Test Manager - Banking - Yorkshire - £450 per day

£400 - £500 per day: Orgtel: Test Manager - Banking - West Yorkshire - £400-£5...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone