Government to Conduct Personal Loan Review

Thu, 22 Jul 2010

Consumer affairs minister Ed Davey has revealed that the government is to undertake a comprehensive review of the British consumer credit market. Davey announced that he will conduct the investigation alongside the Treasury’s financial secretary Mark Hoban.

The review will examine the personal loan industry from the perspective of both the lender and the consumer, and will also consider whether borrowers are sufficiently well informed at present. There are fears that consumers are taking out loans without fully understanding the implications, prompting suggestions that borrowers should be required to pass tests before being approved for credit cards, store cards or personal loans . The review will also consider whether the existing practices involving personal insolvencies are appropriate in the midst of an economic downturn.

The investigation will precede a full consultation on consumer credit policy which is set to take place later this year or at the start of 2011, Davey revealed. The consultation follows a widespread debate as to whether banks have passed on the interest rate cuts from the Bank of England or whether they have been guilty of profiteering.
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