Charity calls for credit reform to tackle rising debt problems

Citizens Advice has issued a credit warning to consumers after revealing that people approaching the agency with debt problems had risen by three-quarters over the past seven years.

On the back of the figures, the charity has today called for a reform of Britain’s "outdated" consumer credit laws to be included in the Queen’s Speech later this year.

Consumer debt issues seen in bureaux stood at 706,700 in 2003/4 compared with 405,800 in 1996/7 – a rise of 74%.

Consumer debt – which includes credit card debt, store-financed consumer purchases, car loans and personal loans – accounted for two thirds of all debt-related issues seen by bureaux last year.

Bureaux dealt with nearly 1.1 million debt-related issues last year, a figure that also includes housing, utilities and benefits-related debts. But consumer debt is by far the biggest type of debt problem for which people come for help, and it is increasing more than other types of debt problem – by over 35,000 in the last year alone, the agency said.

Citizens Advice Chief Executive David Harker said: “The credit boom of recent years has brought advantages to many of us. But it is clear that others have found it harder to control their borrowing and have ended up in debt.

“Citizens Advice has been warning for a number of years that the problem of personal debt is reaching crisis levels and the fact that the number of consumer debt problems brought to us has risen significantly yet again underlines this warning."

The National Consumer Council (NCC) recently warned that the credit industry had a "long way to go before the credit market works in the best interests of consumers".

Speaking after Tuesday's Treasury Select Committee hearing on credit cards and marketing, Claire Whyley, Deputy Director of Policy said: "Full information sharing between lenders is vital so borrowers already overburdened with debt don’t get tipped over the edge. Banks already share information on their mortgages customers, so why not on credit card customers too? The credit industry must stop dragging its feet."

(gmcg/mb)