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Vulnerable Borrowers

Volume 407: debated on Friday 20 June 2003

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To ask the Secretary of State for Trade and Industry what plans she has to amend the Consumer Credit Act 1974; and if she will make a statement on measures aimed at protecting vulnerable borrowers. [120634]

A review of the Consumer Credit Act 1974 was launched by my predecessor in July 2001 with the publication of a consultation document "Tackling the loan sharks—and more!" A summary of responses was published in February 2002 and a progress report was published in August 2002.There has been further consultation on five key areas for reform:

Increasing or removing the £25,000 financial limit in the Consumer Credit Act and reviewing the status of some exempt;
Making the regulations on early settlement fair and equitable to both lenders and borrowers;
Enabling lenders and consumers to be able to enter into and conclude credit agreements by electronic means;
Reform of the consumer credit licensing regime; and
Reform of the protections offered to consumers in respect of extortionate credit;

Further consultation papers will focus on:

Simplifying the consumer credit advertising regulations; and
The form and content of credit agreements;

I intend to complete an implementation plan later this year and implementation will begin in 2004.

The consultation on making the extortionate credit provisions within the Consumer Credit Act 1974 more effective closed on 6 June 2003. The responses to this consultation are currently being analysed. Once this analysis is complete I will publish details of the measures I intend to take to protect vulnerable borrowers from exploitation.

In addition a National Debt Helpline pilot was launched in March 2002 to give consumers free, easy access to debt advice and where appropriate help them to draw up debt repayment plans to manage their debts. This project is funded jointly by the Government and the credit and finance industry.

The pilot aims to test how effectively consumer debt problems can be resolved by a national telephone advice and to establish the strength of the case for a national free money advice service. Since 1 March 2002 the National Debtline has helped 29,412 people with debt problems. They deal with 700 calls per week, providing a wide range of advice including on income maximisation, bankruptcy and debt management schemes to a wide variety of people from various social and economic groups.